New methods of home ownership structures needed: Kiwibank (Source)

It is often reported that it is difficult for younger people to get into the New Zealand housing market. Kiwibank recently released its State of Home Ownership report which showed that 85% of those surveyed wanted to buy their own home but 32% don’t believe home ownership is achievable to them, many being young people.

The barriers to home ownership are seen to be high house prices, living costs, being able to save for a deposit, high interest rates and low wages.

According to Steve Jurkovich, chief executive at Kiwibank, there is confidence returning to the housing market and further large cuts to the OCR by the Reserve Bank definitely help.

He said people are realistic about house prices and the time it takes to save for a deposit, with some also choosing not to buy at all and opting to put their money into other things.

Alternative pathways to getting on the housing ladder have been explored but awareness of alternative options did vary.

Rent to own was the most attraction option, followed by co-ownership, community housing and cross leasing.

Jurkovich believes banks need to do better when it comes to making people aware of alternative ways of getting on the housing ladder. He describes co-ownership as pretty routine and provides a stepping stone to sole ownership.

Our View: It is great to see a bank identifying other ways in which the younger generation can explore to get on the property ladder. However, with some of the alternatives suggested there would be additional factors that buyers need to be across before making the commitment. Also, if you co-own a property, it would be best to set the arrangement up well from a legal perspective. We would highly recommend seeking the right advice with any property purchase, but especially when using an alternative pathway to ownership. We have a lot of experience in this – so call us.

Current first-home buyers paying less but getting more (Source) 

CoreLogic data shows that first home buyers are paying less and potentially securing bigger houses this year than other first home buyers who purchased in recent years.

The median price for first home buyers has fallen from $715,000 in 2022 to $695,000 last year and sat at $685,000 in the first nine months of this year.

The purchase of standalone houses was up 3% from 70% in 2023 to 73% this year. These factors, according to Kelvin Davidson of CoreLogic, point to first home buyers securing a good deal.

First home buyers were responsible for 27% of all purchases in the first nine months of this year, an increase on the long-term average of 21%.

Of the main centres, the strongest market for first home buyers this year was Wellington.

According to Davidson the outlook for first home buyers is still good, with the expectation being that investors would start to be more active again in the next 12 – 18 months, bringing more competition to first home buyers.

Barfoot & Thompson's sales dipped in October but the average selling price increased (Source) 

According to Auckland’s largest real estate agency Barfoot & Thompson, they sold less properties in October than they did in September. However, both the average and median sale prices increased, and it was the most properties the agency has sold in the month of October since 2020.

The average price increased from $1,081,269 in September to $1,129,950 in October, whilst median prices went from $934,500 in September to $955,000 in October. These increases followed three months of declines.

New listings in October surged to 2361, the most the agency has seen for the month of October in at least 20 years.

Barfoot & Thompson Managing Director, Peter Thompson says increased confidence in the housing market attracted additional listings from vendors. This was supported by a decent number of new builds also reaching the market.

US election 2024: Australians investing in US residential property enjoy higher rental yields in America (Source) 

Australians who own property in the US say it can be profitable provided you do not rely on capital gains.

Satisfied Australian investors include Leigh Jasper, who purchased a 4-bedroom house in Silicon Valley in 2010. He paid far less than the equivalent of his hometown of Melbourne but says the rental yield on the property he now leases out is higher than what he would get in Australia.

Renters in the US pay more than what a person in Australia would pay for an equivalent property.

According to Dolly Lenz, a New York based real estate agent, the weaker US dollar and falling prices of US homes makes investing there more attractive. However, both remain higher than they were a decade ago.

We’d be interested to know what appetite you’d have to invest offshore in property Erksine Owen facilitated/ arranged it.

Some believe the compelling reasons to buy in the US aren’t there anymore. There are also the differences with property taxes to consider with US council taxes being higher due to local government also providing schooling.

Over half of the country's mortgage pile getting an interest rate reset within six months (Source) 

Latest figures from the Reserve Bank show that more than half the country’s mortgages will be due an interest rate reset within six months.

Mortgage customers have been selecting shorter fixed-term loans in order to secure the best deal, with the view that interest rates will continue to fall. To date, this strategy has paid off with RBNZ having cut the OCR rate more than once since August, with further cuts predicted.

There is $146.4 billion due for refixing by the end of March 2025.

Moving forward, mortgage holders will need to decide if they choose to fix for a short term or a longer term.

RBNZ has its last OCR review on November 27, which is predicted to see the OCR being cut by a further 50 bps (to 4.25%). Longer term, the expectation is that the OCR will reach 3.75% by February 2025.

Cuts to the OCR do not always correlate with similar cuts to mortgage rates. Banks have been cutting mortgage rates before OCR announcements recently, so future OCR cuts may not be mirrored by mortgage rates.

Our View: If you are facing a refix soon keep abreast of what is happening in the market. Better still, if you are ever unsure, speak to the experts. They are following what is happening on a daily basis and can provide the best advice and help secure you the best deal. If you don’t know who to talk to Wendy Ryan-Kidd, our Mortgage Advisor is available to help.

Have an enjoyable weekend!

From the team at Erskine Owen.