Why the housing market may be heading for a recovery

Is there a glimmer of hope on the horizon that a recovery to the housing market may be on its way? We decided to find out.

If the housing market has had you a bit down of late, there may be a glimmer of hope on the horizon: the signs are showing we may be heading towards a housing market recovery.

The latest OCR hike brought RBNZ’s interest rate to its predicted peak of 5.5%. While this isn’t really due to begin to drop again until 2024, there’s also no immediate indication that it’s going to go up further, meaning it’s easier to forecast cash flow longer term and provide confidence to both the lender and borrower in assessing serviceability.

Rental yields are also looking a little more positive thanks to the recent house price falls.

These two alone are already great reasons for investors to feel a little more confident about getting back into the market.

But there are other factors at play which will be bringing other buyers back into the mix, and that could slowly bring a spring back into the housing market’s step.

What’s indicating a turning point?

On the 1^st of June, the Reserve Bank of New Zealand eased loan-to-value (LVR) restrictions, meaning that more borrowers might be able buy a property with a lower deposit. This, combined with building consent numbers being down and immigration numbers set to go up, will likely result in driving housing prices back up as well as demand outstrips supply.

And renewed interest in buying property is already being noticed by others in the industry. In his latest edition of Tony’s View, Tony Alexander revealed that real estate agents are slowly seeing more people display cases of “FOMO” and more buyers are attending open homes. And buyers are worrying less about getting finance or that housing prices will fall after they’ve purchased­­­.

Sounding good?

If all of this is making you feel a little more confident about taking that next step towards purchasing your investment property, then it’s time to chat with your enable.me coach (if you haven’t already) and then come have a chat with us.

Regardless of what the market is doing, you need to be in the right financial position to purchase, and if you need a few more months to get there, then you’ll be better off in the long term.

So:

• Revisit your requirements – what is the investment property meant to help you achieve, what kind of yield or capital growth do you need help get you there? Your enable.me coach can help with this, and help you set the criteria for what kind of property you should be looking for.
• Check your numbers – interest rates are still high meaning you still have to pass strict serviceability tests and likely have to top-up your mortgage. Make sure you’re able to cover those costs on top of having enough to cover the deposit for the property. (don’t forget to consider Turnkey vs Land & build packages, as this will influence how your finances will need to stack up)
• Then, one you know what you’re looking for, take some time to browse our listings or talk to one of the team about finding a property that fits your investment needs – we have plenty of houses available, and will always be adding more.

An imminent market recovery is certainly something to get excited about, and if this means you’re in the position to purchase, we can’t wait to help you with that process. But it’s also important that you remember the reason why you’re investing and make sure that your finances stack up. You want to make sure you’re able to invest for the long term so you can reap the benefits of your investment.