The New Zealand housing market: Is now a good time to buy?

by May 3, 2022First Home Buyers, Industry News, Mortgages, Non-Bank Lending

The New Zealand housing market has experienced some major ups and downs in recent months due to some interesting regulatory changes as well as wider global economic conditions. 


House prices across the country have started to fall while interest rates have begun to climb, and many potential buyers are asking themselves the same question: is now the right time to buy?


As one of New Zealand’s leading mortgage brokers, we’re watching these changes with keen interest. In this blog post, we’ll explore some of the key influencing factors shaping the property landscape and discuss whether now is a good time to think about buying.


House prices falling

House prices dropped 0.6 per cent in the first quarter of 2022, with some economists projecting declines of up to 10 per cent by the end of the year. 


While there are a number of factors at play here, the sluggish market can be at least partly attributed to the controversial amendments to the Credit Contracts and Consumer Finance Act (CCCFA), which came into effect in December 2021. On paper, the CCCFA changes were designed to prevent at-risk borrowers from being burdened with unaffordable debt, but in reality they’ve had a significant impact on credit creation in the lending sector and have obstructed many borrowers from taking out home loans. 

CCCFA changes make it harder for first home buyers

The CCCFA amendments have led to long turnaround times for mortgage applications and a less than consistent outcome for borrowers. As a result, some borrowers – many of whom may have been formerly eligible for a traditional bank loan pre-amendment – have been forced to turn to non-bank lenders to secure a mortgage. This has put significant pressure on the non-banking sector – some of which are now running low on funds. 


To curb some of these unintended consequences, the government is planning to relax some of the CCCFA changes in June 2022, which will hopefully make it easier for first home buyers to enter the market. This is particularly important given the recent decrease in rental stock and increase in rents, which creates a cycle that makes it harder for first-time buyers to get their foot on the property ladder. 


Banks have always ‘stress tested’ prospective home loans at rates much higher than the actual pay rate. Even at the peak of the global financial crisis in 2008, mortgagee sales in New Zealand were among the lowest in the world. We have never had reckless mortgage lending in New Zealand, and this should be reflected in the CCCFA.

Is it a good time to buy?       

Whether or not it’s a good time to buy depends a lot on your motivations, lifestyle and financial situation. 


There’s a popular saying in real estate: the best time to buy was yesterday, the second best time to buy is today. That’s a sentiment we tend to agree with – at least when it comes to buying a home that you’re going to live in for a few years. 


Buying your own home is not just about capital gains. It’s also about investing in the future for your family, securing a stable base from which to grow and putting your personal touch on a property so that it becomes truly yours. If that’s the case, then there’s never really a bad time to buy. 


Take the global financial crisis, for example. During some of the worst economic conditions in recent history, property values dropped by around 15 percent, which prompted many people to reconsider their plans to buy. And what happened? Prices rebounded about a year later and continued to rise substantially in the years ahead, with Auckland’s residential property values more or less doubling between 2010 and 2020. 


It’s possible that we could see a similar pattern occur again once the market settles. Over the long-term, houses tend to increase in value, which makes the short-term peaks and troughs in the market less important in the grand scheme of things.


Talk to the leading mortgage brokers

Despite the challenges facing the property market, we’re extremely busy across the board here at iLender. Our biggest growth area is Kiwis overseas buying property here in New Zealand, both as an investment and to have a home to return to further down the track. We’re seeing significant activity in the first home buyer segment – also an increase in investment borrowing, particularly from experienced property investors. 

Ready to take the next step? Talk to our advisers today to see how they can help. Give us a call on 0800 LENDER (536337) or email [email protected].

About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

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The New Zealand housing market has experienced some major ups and downs in recent months due to some interesting regulatory changes as well as wider global economic conditions.    House prices across the country have started to fall while interest rates have...

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