Chief executive offers tips for deal hunters and hopeful buyers
Mortgage Lab chief executive Rupert Gough claims that the chances of getting a property bargain in 2022 will be higher than they have been in years despite the soaring property prices in New Zealand recorded in December 2021.
At the end of 2021, CoreLogic New Zealand’s House Price Index (HPI) saw property values rise by 1.9%, up from the 1.8% growth rate in November.
However, Gough claimed that the combination of new lending rules and increasing pressure on investors from rising interest rates and larger tax bills add up to a more significant chance for deals despite the ongoing heat in the market.
”I would be surprised if you see a sudden flurry of them, but it will feel like it because there have been none for the past couple of years,” Gough said, as reported by Stuff.
Gough expects more bargains in July when property investors file tax returns and realise the impact of the mortgage interest tax deductibility on their cashflow.
Gough advised hopeful buyers to start reducing their expenses now because the new rules under the Credit Contract and Consumer Finance Act (CCCFA), which aim to protect vulnerable borrowers from shop trucks and predatory lenders, require banks to look at spending before granting a loan.
Gough claimed bargain hunters could take advantage of the law amendments by looking for areas where listings have dramatically increased and properties that might be unappealing to a broad range of buyers.
“For example, older properties that may not be attractive to many investors due to the removal of interest cost deductibility, but also not first-home buyers if the property requires a lot of work to be up to a decent standard,” Gough said, as reported by Stuff.
He also advised hopeful buyers to attend 20 open homes before making any offers, giving them a good sense of the market and the ability to spot “when a diamond pops up.” In addition, they should look at the deadline and tender sales because auctions have often placed a mountain of costs on buyers as they often had to have valuations and building checks done before bidding.