Not unlike Christchurch’s interchangeable weather as we inch closer towards the autumn months, the property market too is seeing its fair share of highs and lows.
Yes, that means it’s not all positive news this month, but then, where there’s challenges, there’s also hope.
The Real Estate Institute of New Zealand is already reporting a slump in sales activity in the property market and this is evidence the market is easing off fast.
When we start to see momentum in the housing market, everyone wants to buy for fear of missing out. Now people are starting to get cautious about spending because they believe the prices will come down.
Throw in the increasing interest rates, tighter loan-to-value limits and new lending rules and we can expect to see a short, sharp correction in the property market by September this year or the beginning of 2023.
In the meantime, there is still a shortage of land in Canterbury driving sales, but we’re seeing a real change in purchasing patterns.
Stages six and seven of Rolleston’s Farringdon subdivision were recently released and both releases sold within hours. My industry sources tell me what was unusual about these releases was that around 90% of the sections were purchased by individuals looking to build their own homes, as opposed to builders who were snapping up the land just last year.
We’re starting to see those builders who did snap up sections last year - and paid premium prices for them - are now hoping to on-sell them! We’re working with a handful of builders in this boat, who no longer have confidence they can get the materials they need to build on their land, so they’re looking to flick it on.
But the market flattening out does mean there are opportunities there, especially if you’re in the market for your first home. The Loan Market Paramount team is, as always, here to support first home buyers in their journey and we’re still getting some 10% deposits across the line. There is also potential for lending policies to ease up in coming months, with calls for a review of the new responsible lending laws introduced on December 1 heating up.
If you’re looking to upgrade your existing home, now is a great time to snap up a good deal. If you purchased a couple of years back, the increased value in your home means you can potentially upgrade while maintaining a similar mortgage to what you’re already paying.
If you’re thinking about an investment property, my advice is that this might not be the right time to purchase an older property. However, if you’re in a position to buy new, that’s where I can see the opportunities right now.
While we can’t rely on capital gains right now, we will still need housing supply and the market will take off again in a few years time, as it always does. It just means we need to start thinking long term if we’re looking at investment properties right now.
We’ve been very busy helping our existing clients purchase brand new investment properties in Christchurch, Selwyn, North Canterbury, Ashburton, and surroundings.
It’s also time to start thinking creatively, as an example I’m building a 260 sqm floor size on a 650 sqm land as an investment property myself, I will do 3 bedrooms, 2 bathrooms, single garage and a 2 bedroom, 1 bathroom and single garage dwelling on the property separated by intertenancy wall which will enable me to provide two decent rentals from that one property.
Also don’t discount North Canterbury when you’re making plans, as there are plenty of opportunities here.