First Time Buyers Are Taking Advantage of Post-Lockdown Conditions – As they should.
In the wake of Covid-19, the government and banks adapted to the conditions in an attempt to keep the market afloat, this included removing LVR restrictions completely, lowering the Official Cash Rate, and banks dropping mortgage rates further than the record-setting lows that were seen before lockdown. With a slight fall in house prices predicted in the future, it seems that it is the perfect climate for first-time buyers to invest in the market.
Numbers Are Increasing
The latest residential auction results suggest the property market is settling back to normal trading patterns, with the rapid growth in auction numbers of the last few weeks starting to match that pre-lockdown. The number of properties being offered at auction is continuing to increase after a stagnant few weeks after level 4, and the number of properties sold at auction stood strong alongside the week previous, with 82 sales recorded in both weeks.
It’s not only that buying who are getting a bargain, it seems that properties are holding their own in the auction rooms. Where interest.co.nz was able to match selling prices with rating valuations on the properties that sold at auction last week, 64% achieved prices that were higher than their rating valuations.
The number of homes being auctioned by Auckland’s largest real estate agency Barfoot & Thompson has also continued to grow with 85 residential properties Auctioned in the first week of June, which was an 89% increase on the 45 properties the agency auctioned in the last week of May.
And Trade Me’s data suggest its first time buyers who are the most curious, revealing that there were twice as many 19-to-30-year-olds browsing Trade Me property listings in May compared to the same time a year earlier.
Head of Trade Me Property Aaron Clancy stated that this is a continued trend that was already happening before lockdown, “This is a continuation of the trend that first emerged in April, when we saw a 38 per cent year-on-year increase in the number of under-30s browsing property when compared to the same month in 2019.”
Due diligence Must Be A Priroity
Despite how attractive low-interest rates and house prices are, experts encourage those considering buying to make sure they are in the financial position to do so.
ANZ chief economist Sharon Zollner stated that these attractive aspects could set up financial stability issues if people were encouraged to borrow and then had trouble servicing that debt,“If you’re worried about losing your job any financial adviser would tell you to save more. Cutting interest rates when times are bad is designed to make people save less and borrow more, that might be appropriate for some but not all.”
Consulting with a mortgage broker can be essential at a time like this, to make sure that you are in a position to manage and take on the debt that comes with buying property,