February 2014
Back to the future
From ANZ chief economist Cameron Bagrie
New Zealand is firmly into
of the market.
an economic expansion.
Good times are here.
With the RBNZ expected to raise the official cash rate in
However, there are still
the first half of this year and with an increased number of
some underlying
houses helping to alleviate dwelling shortages in Auckland
economic tensions, many
and Canterbury, the outlook is for a continued cooling in
of which have built up
nationwide property price growth.
over time, that have not
Patricia Hinchey
been fully addressed.
a sharp fall in November. The volume of house sales was
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The performance of the
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property market cannot be
Bayleys Real Estate Ltd, Bayleys
Sales volumes fell one percent in December, compounding
just 1.1 percent lower than a year ago.
disconnected from the
Three percent Gross Domestic Product growth is expected
broader economy.
over the next two years, underpinned by strong commodity
Licensed under the REA Act 2008
prices, supportive financial conditions, and huge
construction work planned.
Since the introduction of loan-to-value (LVR) lending
restrictions, the volume of houses sold has eased eight
percent. However, prices continue to increase, with the low
inventory of properties on the market keeping the median
Residential consent lifted 11 percent in December. There
were 21,300 residential consents issued last year - the
highest annual number since 2007.
days to sell low.
Annual net immigration lifted to 22,468 people last year Monthly mortgage lending has remained steady over the past
few months, but mortgage approvals are lower than average
for this time of year as the LVR restrictions bite.
the highest 12-monthly net inflow for a calendar year since
2003. This reflects strong arrivals and low departures, with
the net permanent and long term (PLT) outflow to Australia
slowing to 19,605.
The property market is caught in the crossfire, with
strengthening inward migration, dwelling shortages, the
impact of rising mortgage interest rates and signs the LVR
restrictions are impacting housing turnover in the lower tier
Setting sale prices and
considering offers
Mortgage
borrowing
strategy
From ANZ chief economist Cameron Bagrie
.
ANZ’s fixed mortgage rates have not
changed since December. Financial
market prices show an expectation for
the official cash rate to rise by more than
one percent by the end of 2014 and by a
further half percent in 2015. This is a
factor borrowers should take into
consideration when making the decision
Selling your home may seem a daunting task for many and there are several
to fix.
things to consider and decisions to be made when doing so.
While further increases in mortgage
However, by arming yourself with the right information and being prepared before
rates are inevitable, stiff rises in rates
your property goes to market, you can minimise the stress and help make sure
are needed to fix for longer than two
the process has a positive outcome.
years, making one-year and 18 month
terms, where pricing is more attractive.
Two key aspects of the process are setting the sale price before your property
goes to market and considering offers from potential buyers. Below are some tips
on both of these. Remember, it is your real estate agent’s job to guide you
through both these processes.
That said, some borrowers may wish to
consider fixing a small portion of their
mortgage for longer terms for the sake of
certainty.
Deciding on an asking price for the sale of your home should take careful
consideration. Selecting an asking price close to where buyers see value in your
ANZ’s fixed mortgage rates have not
property from the beginning, will increase your chances of getting the best result.
changed over the past month despite the
Your agent will guide you to set a price for your property that is realistic and
gradual rise in wholesale interest rates.
meets the market rather than setting unrealistic expectations.
Like the market, ANZ expects the OCR
If you get an early offer below your asking price, don’t be rushed into a decision.
to go higher in 2014. If the RBNZ
Finding out about the purchaser’s own circumstances and motivations can help
delivers on market expectations, floating
you to make an informed decision on how best to proceed with their offer. Your
mortgage rates could rise by one percent
real estate agent will help guide you through this process. It is their job to obtain
over the year ahead. But while ANZ
the best offer possible from every genuine buyer.
believes the RBNZ will raise rates this
year, this does not necessarily imply that
Take your time, stay informed and take advice from a professional – your real
borrowers should be in a hurry to fix for
estate agent.
more than 2 years.
For standard (i.e. non low-equity)
borrowers, floating rates are more
sensitive to OCR moves and are already
higher than short term fixed rates.