September’s property report in short

A family of ducks waddle off to another open home.

Spring: a time for flowers, cute baby animals and daylight savings, as we say “good riddance” to the cold and hit the warm(er) months.

It’s also usually a time for more property listings and increased real estate activity. Last month showed little change from August however: September reinforced the fact we have largely a two-speed house market, with demand exceeding supply in our two biggest cities and activity less heated, though still pretty busy, elsewhere.

The market has a slight spring in its step

Listings did indeed increase with the change in seasons. The NZ Property Report from realestate.co.nz shows a whopping 7.6% increase on August (boom!), though this is up on last September by just 0.3% (aww). These few extra listings did nothing for Auckland’s inventory level, which dropped to a new record low of 17.5 weeks.

The asking price nationwide dropped by just 0.3%. Wellington and Canterbury rose a little while Auckland dropped slightly. More fun was to be had in the regions; four of them rose by over five percent, with Coromandel (9.3%) and Nelson (10%) topping the table.

There was also a leap in lifestyle property listings – 29% up on August and 8.3% over last September. An opportune time to mention that if you’re interested in finding a lifestyle property, Open2view’s search engine makes it easy as.

For more on what’s happening in your area check out the full property report.

Season of new life (and one notable death)

Our banking sector was quick to dance on the grave of the National Bank – although not its dearly departed horse, Cody.

Advertisements have been popping up all over the place to entice unhappy National Bank customers to change teams. It’s just another reason why the great Mortgage War of 2012 looks set to rage well into next year.

Case in point: on Monday the BNZ lowered their 18 month fixed mortgage rate to 5.25%.

Then on Tuesday, ASB also went and cut their home loan rate. But wait, there’s more: fix your mortgage for two years and not only will you be charged 5.25%, but ASB will also give you a free Samsung Galaxy tablet and up to $1000 cash.

Could ASB’s free gift+cash offer be the start of a trend? It could serve as a way for banks to cut their rates by less while still dangling a tasty carrot in front of potential customers. Time will tell.

Affordability forecast: lots of wind but mostly fine

Even with the Mortgage Wars still raging, home affordability has taken a hit as rising prices blunt the effect of those low low interest rates.

The median house price in New Zealand jumped from $361,000 to $370,000. It now requires 53.5% of a single after-tax income to service an 80% mortgage on a median house – up 1.2% on July.

It’s still pretty sweet for first timers however – affordability there only decreased 0.2% on July. If spending 45.1% of a median income on a lower-quartile house sounds steep, remember it took 64.7% just four years ago. For all the ‘new house bubble’ talk that still comes up from time to time, in many ways we’re far off where we were just five years ago.

We recommend checking out the full Roost Home Affordability Report for August and its companion report for first home buyers.

Fresh out of spring metaphors

In conclusion there are few surprises: more listings are on their way and Auckland and Canterbury are still where most of the action’s at. As we’ve been saying since this blog started, it’s a great time to get on the property ladder.

Mind you, we also said in that first blog post that interest rates “must go up at some point”. They will – just not, it seems, for a long while yet.

In these conditions, the next few months will see business blooming. (Ah, I knew I could find one more bad spring-related pun!)

 

UPDATE:

Massey University just today (9 October 2012 AD) released the latest of its quarterly Home Affordability Reports. It’s a valuable bit of information which shows affordability, according to their calculations, improving everywhere except Auckland. Even then, Auckland only deteriorated 0.4% over the past year.

Nationwide, the national affordability index dropped by 4.9% since this time last year and 2.8% since the last quarter. This index is dictated by median house prices (up $1000 this quarter), the average wage (up $6.25) and the average monthly mortgage rate, which has dropped from 5.99% to 5.84%. The latter two factors more than canceled out the house price rise.

For more details on how your region is doing, just click here.

2 thoughts on “September’s property report in short

  1. 53.5%? You’ve got to be kidding. I was always taught that a mortgage should not take up more than 33% (1 third) of a person’s income. How can 53.5% be acceptable? First home buyer here (well, if the quality of properties in our price range were better we’d be buying) and reading this really scares me.

    • Hi Rochelle – definitely understand your concern! 53.5% is actually much lower than it was last decade; in March 2008 it took 83.373% of one income to service a mortgage! It’s easier when a two-income couple buy together, but then there are other issues to factor in there of course (children, changes in jobs etc).

      It’s worth remembering too that figure is for a median house – first time buyers should aim a little lower when buying house #1. Climbing the property ladder to the dream house takes some time, especially at NZ prices – though from the sounds of it you already know that!

      Definitely check out the affordability report for first home buyers at http://www.interest.co.nz/property/first-home-buyer, and we did a blog post a few weeks back on reducing mortgage costs http://o2v.co/hs7 – although you’ve probably thought of most of these already!

      One last thing – traditionally more properties come on the market in spring and summer, so don’t be discouraged by the quality of the selection just yet. Fingers crossed here for you!

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