The latest market trends from LJ Hooker Group have noted a slowdown in the property market in June. Despite fewer listings and sales, auctions have delivered results across the country.
LJ Hooker Group Head of Network NZ Campbell Dunoon believes the winter property market slowdown has begun earlier this year.
“Winter is typically a quieter season for the property market, however the bite has hit earlier in the season as economic pressure and regulatory changes have buyers and sellers taking precautions,” Dunoon said.
“Despite a slower June, salespeople across the LJ Hooker and Harveys network have noticed some optimism in the market as they prepare for a hopeful soften in interest rates later this year. While investors have been cautious, the changes to interest deductibility and the bright-line rules create fewer barriers.”
While the market has been quieter, there has still been competition for properties, with 26 percent of LJ Hooker and Harveys June sales were using auction.
“The success of auctions in our national network show there is still competition in the market. When property sellers meet the market and price their property appropriately, the right marketing campaign can still drive interest,” Dunoon said.
1 July, 2024 saw a sweeping number of regulatory changes introduced that could impact the property market and the ability for owner occupiers and investors to buy property. The changes included a reduction in the bright-line rules to two years, easing loan-to-value ratio measures, and the introduction of debt-to-income ratio caps.
“The coming months will reveal if there is an increase in property stock from investors, particularly from mum and dad investors who might be feeling the pinch of interest rates now the bright-line rules have changes. At the moment, it is too early to tell.
“It will likely take some time to see what impact debt-to-income (DTI) caps will have on the market with interest rates holding high. As interest rates start to soften and more buyers get into the market we will like likely see the impact of DTI caps.”
On 4 July, 2024 Housing and Resource Management Act Reform Minister Chris Bishop released details about the government’s Going for Housing Growth policy. The policy intends to free up land for development and encourage development opportunities in key urban areas.
Dunoon welcomes the new housing rules, but raised concerns as to if it will deliver vibrant communities where people want to live.
“It is great to see new measures being introduced with the intention to increase housing opportunities in New Zealand, but there is concern as to whether the infrastructure needed will keep up. Infrastructure is a major weakness in our communities, not effectively connecting the regions, where people want to live, to our cities, where people want to work,” Dunoon said.
“Better access between cities and regional communities will open opportunities for new residential developments. Many people are looking to relocate outside of the big cities, but options and the current transport connections are detractors, putting more strain on our cities and housing.
“Maximising existing modes of transport and creating incentives to build along major arterial routes with existing, functional bus and train links would be effective locations to start development.”
For this to be a success, the government needs to look beyond the development of new homes, but the communities they are creating. They need to work to ensure there is access to all the services and necessities that families need in a safe community, creating a high quality life for all residents.
“Every day Kiwis want to live in a place they are proud to call home, and that extends beyond the front door, they want an environment that has services and a sense of community. People want to walk the streets and be among thriving local businesses and have the appropriate recreational activities for families.
“Vibrant communities lift our quality of life and make our towns and cities more liveable. Taking steps to improve the quality of our communities helps attract visitors and tourists who spend money and support local economies.”
With a lot of change in the property market, and softer winter conditions, there are a lot of variables for buyers and sellers to consider. An ease in financial pressures could be sooner than expected with a softening in language from the Reserve Bank in the latest Monetary Policy Committee statement.
“Property owners are looking for financial relief from high mortgage rates. While banks have slightly reduced fixed mortgage interest rates, the latest comments from the Monetary Policy Committee have the major banks predicting the Official Cash Rate could be later this year, with Kiwi Bank anticipating a cut as soon as October. While private lenders have eased mortgage interest rates, this will reduce the pressure further,” Dunoon said.
“With all these policy changes and market factors to consider, the property market we are seeing at the moment is likely to be more active as we head into spring and summer. Despite that, there are still opportunities in this housing market. Your local real estate salesperson will be able to help you understand how you can successfully market your property or buy a home in this season,” Dunoon concludes.