Auckland’s median housing price sat at NZ$850,000 in June – the same price as May this year, and the same price as June 2018. This has prompted questions whether it’s a good time to buy residential property in Auckland. In May this year, the Reserve Bank of New Zealand cut the Official Cash Rate to a record-low 1.5 per cent. Almost immediately, some of the major retail banks announced they’d follow and cut their mortgage and term deposit rates. It was then cut to 1 per cent in August.

First-timers rejoice

The announcement was good news for people who’ve been looking to get onto the property market for some time, like first-home buyers. Mortgage payments are now likely to be more ‘affordable’ than they’ve ever been. For those with floating mortgages, it’s a chance to pay off their mortgage slightly faster – if they leave their mortgage payments the same. The banks are naturally taking a careful approach to lending. This is welcome, because in the coming years interest rates are likely to rise. No one would like to see a highly leveraged housing market, where people have borrowed to the maximum and may be unable to meet their home loan repayments.

Moderate growth

Auckland region’s median house price has increased by a moderate 3 per cent over the past three years, to NZ$850,000. This means that, for the first time in a long time, many first-time buyers’ savings aren’t falling behind house price rises, so they can get a foot in the market. Compare that to buyers in Hawke’s Bay or Manawatu, who’ve seen double-digit annual growth rates for months. This makes it really hard for first-time buyers.

Upsizers and downsizers

More stable house prices in Auckland have also helped families upgrading their home to a larger one, or wanting to move to a different school zone. More people are buying and selling in the same market. They might not have got quite as much for their old home as they would have liked, but it meant that the step up to the next property is likely to be more affordable. They might even be able to afford a bigger home for their budget than they thought. For downsizers, it’s a similar story. Again, they might not get as much for their current property, but the property they’re looking to buy might be cheaper.

The property investing market

For residential property investors, the cost to entry is more affordable than it’s been in a number of years, and there are attractively low interest rates. Investors have to take into account new law changes affecting tax breaks, insulation, asbestos and methamphetamine. If you’re hoping to buy, take your time, do your due diligence, visit open homes and get advice from legal and financial advisers.

Published 28 November 2019

This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.