I recently had the chance to listen to economist Tony Alexander speak at the Financial Services Council Conference. Although many in the Media see the current market conditions negatively, Tony instead sees them as a once in a generation opportunity to buy property that historically would have been out of reach.
Here are his reasons why now is the time to buy.
1. Migration is increasing at rates we have not seen for over 3 years. With the government relaxing migration red tape, opening pathways and making changes to visas, the numbers migrating to New Zealand are set to continue increasing. As the population shifts to a growth phase, this will increase the pressure on house prices.
2. Interest rates are likely to have peaked or be very close to peaking. This means that the interest rates available for purchases are now more competitive than they have been recently. An experienced mortgage broker is often able to access better rates than those advertised by the big banks.
3. Brand new homes are available now. Buying new is no longer restricted to buying off plan, with the risks that can come with purchasing before completion. The market has seen an increase in new homes that can be purchased with immediate occupancy. This means you have the benefits of buying a new home without the wait time and some of the risks.
4. The LVR restrictions are set to be relaxed in June 2023. A loan-to-value ratio (LVR) is a measure of how much a bank lends against mortgaged property, compared to the value of that property. Banks are limited in the amount of high loan-to-value ratio (LVR) loans they can make to home-buyers with less than 20% deposits. Currently they are restricted to 10% of new lending, but the proposal is from 1 June that this be increased to 15%. This means more that more buyers will be able to borrow larger amounts.
5. The CCCFA rules aimed to protect vulnerable borrowers have been quite tight and this has meant that some seeking to get a mortgage have been knocked back due to their level of discretionary spending. The CCCFA rules are being changed so that lenders can now exclude discretionary expenses and they will provide more flexibility for lenders about how certain repayments may be calculated. This means that some of those who believed they couldn’t get a mortgage approved will now be able to as items of discretionary spending are identified and removed.
As you can see there are some very valid reasons why Tony believes right now is the once in a generation opportunity to buy the property you’ve always dreamed of. If you’d like to discuss how these changes could impact you, contact us today to get expert advice on your situation and find out what options are now available to you.