"It feels like people feel like this is their sweet spot where affordability is there"
With so much uncertainty in New Zealand's property markets at the moment, many Kiwis are left confused about their options. Lower interest rates means more borrowing capacity. But rising unemployment means some residents remain cautious about spending. Meanwhile, drops in property prices have created winners and losers in the market – depending on where one is in their property journey – while all of New Zealand eagerly awaits the possibility of further rate cuts this year.
But amid all of the conflicting narrative, April Hastilow (pictured), a mortgage adviser at Opes Mortgages, described this last year as a possible sweet spot in New Zealand's loan industry.
"I have to be careful to say that it's a sweet spot, because I'm not an economist, but the market certainly feels like it is," Hastilow, who has more than 10 years experience in the industry, told New Zealand Adviser.
"We've spent the last two years talking to people who are coming off of low rates, coming onto high. And they're really concerned. And their property prices were dropping and that was scary," she said. "Maybe they'd signed up to a new build and it had taken a while for it to settle. The lending environment was getting so hard. Not only for the consumer. Your borrowers were finding it difficult to make repayments. Or it was scary to look at what their house was valued at. And then the banks were so difficult to lend with as well. So advisors were getting a lot of stress – a lot of stress from the banks, a lot of stress from clients. As advisers, we really wanted to help, but it was more difficult to do so than it had been in the last year.
"Now it's so nice having conversations with people at the moment," she said. "We're talking to people and we're able to meet their expectations; we're able to get loans that they're looking for, and it be safe. The banks are introducing policies at the moment that are making it easier for people to access lending. It feels like people feel like this is their sweet spot where affordability is there. They can afford to pay for the lending. The interest rate outlook is looking quite good and property prices are expected to rise, but maybe haven't so much yet. So I think that's why we're seeing such a flurry of activity, as people are trying to get that time in the market before either interest rates keep going low, which forces the property prices up, which we've seen cyclically before."
New Zealand Adviser sat down with Hastilow to hear some of her thoughts on different segments of the market. Hastilow's responses have been edited for length and clarity.
The buzz
"It's interest rates," Hastilow said. "At the moment, I think that's the big thing that everyone's talking about. Last year, advisors were talking about approvals and how long things were taking, and that pain point where there were just many waves hitting all at once. This year, it's all about interest rates. It's all about what's happening with that wholesale rate. What's going to happen with the OCR review? And I think what's going to be very interesting is what happens off of the back of interest rates lowering, to then what happens to property prices."
First-time homebuyers
"I'm seeing a massive hike in first home buyers at the moment coming into the market, which has been really comforting to see," she said. "And it's really nice to see how much buying power they have in the market at the moment in terms of options, of properties to put an offer on. But also the amount of bank lending that's available to them."
Investors
"I'm seeing a lot of investor interest in terms of maybe they've been sitting on the sidelines a little while," Hastilow said. "Repayments have been biting for investors with how much they're having to top up properties. And now that that's easing, and they're starting to see maybe the potential for property prices to increase, the activity of investors wanting to get back into the market is quite substantial. And the difference in test rates, meaning we've dropped over 1% in a matter of months, has created the difference for investors of being able to do another property or not.
"[Other drivers in the market are] volatility and uncertainty with other investment platforms," she said. "People are watching crypto; they're watching shares. They're watching how much that is impacted by global forces. I think sometimes that can make people want to go back to a more tangible asset. I think that investors wanting to [invest] at the moment are looking to do so because they've been locked out of the market before, or because they're just seeing it as a really good time. People are talking about interest rates going down, and builders are starting to talk about putting their prices up. Whereas before everyone was, 'Oh, it's a build. They'll be in trouble. You won't get a really good price.' Where we're starting to see that competition heat up; that firms up prices. There's less deals to be had, so investors are wanting to get in before there's a change.
"There's always an interest from Singapore [investors] in New Zealand," Hastilow said. "We're seeing a little bit of Australians. I'm especially seeing, working with, a lot with New Zealanders living overseas. A lot of New Zealanders living in Hong Kong, or New Zealanders living in Dubai, England, Australia, places like that. They've gone, 'Well, maybe I don't want to buy a property over here, because I'm not going to live here forever. But I'd really like to buy an investment property in New Zealand so that I stay in the market. So that eventually, when we do come back, we have assets that we could either move into or sell and buy, but still be selling and buying in the market.' So heaps of offshore New Zealanders looking into the New Zealand market, and especially with turnkeys, because it can be that there is a lesser deposit available for that."
