You know the expression ‘go big or go home’? 2021 was certainly listening! Market growth was huge. In Christchurch alone, house prices increased over 30% in the last 12 months. So what does 2022 have up its sleeve?
While I believe we won’t see anything quite as dramatic this year, I also don’t think we’ll see anything like the doom and gloom the media would have you believe. This is evident just in the mortgage applications already coming through our office this year.
My personal opinion is that the Christchurch housing market will increase by another 5-7% in 2022. We’re seeing a lot of people ready to upgrade from their existing homes and there’s huge interest from North Island families wanting to make the move South.
A number of changes have been put in place to take some of the heat out of the market and they’re starting to have the intended effect.
Amongst those changes were increases to the OCR, which is already pushing up interest rates, making lending more expensive.
Economist Tony Alexander believes the OCR may rise to anywhere from 1.5 or even 2%, so we can expect interest rates to continue to rise, but I don’t think these will be as sharp and fast as last year.
First home buyers now have to navigate the Credit Contracts and Consumer Finance Act (CCCFA) and tightening of lending criteria. Previously with a low deposit but decent income, you could still purchase an existing home, now this is off the table and that’s disappointing because building new isn’t always in the best interest of first home buyers.
However, in the drive to boost housing supply, purchasing new has been heavily incentivised for first-home buyers and new homes are exempt from the LVRs, so if you’re buying new, first-home buyers can secure a mortgage with a deposit as low as 10% with an interest rate as low as 2.03% as of today.
You do need to look at your spending habits because casual spending can make the difference between securing a home loan and not. But if you start planning early and talk to us, we can help you get where you need to be.
The bonus is that if you’re looking at construction or purchasing a new build, those ultra-low rates are still available. As of January, they’re still less than 2.10% so I believe we will still continue to get a lot of interest in new builds, although there are of course challenges in the construction sector, with ongoing labour and material shortages expected to endure through 2022, if not longer.
If you are looking to get onto the property ladder, make sure you chat to our team nice and early. Many people will go to open homes before speaking with a mortgage adviser, but our highly experienced team can help you understand where you need to be before you find the property of your dreams.
My biggest piece of advice is to look at your spending habits because casual spending can make the difference between securing a home loan and not. But if you start planning early and talk to us, we can help fix what needs to be fixed.
We’re facing uncertain times, but the Loan Market Paramount team is here to help. We’ve got years of experience with the awards to demonstrate that we know what we’re doing and we can support you to achieve your New Year property goals, whether that’s getting you on the property ladder, paying off your mortgage faster, securing your first investment, adding to your portfolio or kicking off your commercial development journey - that’s what we’re here for.