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Housing market still growing despite rate hikes

House prices continued to rise in the June quarter, with little sign of any slow-down, the latest Mike Pero Mortgages-Infometrics Property Cycle Indicator (PCI) reveals.

Friday, July 27th 2007, 5:18PM

by The Landlord

“Our clients have two main concerns at the moment – house prices and interest rates,” says Jeff Staniland, CEO of Mike Pero Mortgages Ltd.

“With another round of mortgage rate increases likely after yesterday’s OCR rise, these factors are continuing to impact on housing affordability. More people are finding they either cannot afford a house in the area they want or cannot afford a house at all at present.”

National house-price inflation accelerated to 14% pa in the June quarter, up from 12% in the March quarter, the latest PCI shows. Houses also sold more quickly than in the previous quarter. The rate of growth in the number of houses sold, however, fell sharply in the quarter and is the only sign of possible weakness in the market.

A PCI value of -10 shows a strong housing market downturn, while +10 shows a strong upturn. The Auckland region led the way with a PCI for the quarter of 8.99. Nationally, the PCI was 5.43, up from 4.15 (revised) in the March quarter.

“We are providing advice to a lot of clients on their best options as their fixed-term mortgages come up for renewal. Many are facing interest rate hikes of two percentage points or more,” Staniland says.

“We are telling clients that although rates are high, and may even go higher, at some point they will fall again and they need to retain some flexibility.”

“Simply taking the lowest headline fixed-rate may not be the best option. There are many other factors to take into account.”

Main regional summaries
AUCKLAND PCI 8.99 (8.08 in the March quarter)

The Auckland property market continued to perform strongly in the June quarter, with house price growth unchanged from March (13% pa) and a low average number of days to sell property. Although momentum in the Auckland property market is currently strong, falling net migration and high mortgage rates suggest that price growth will slow by the end of this year.

WELLINGTON PCI 4.35 (7.77 in the March quarter)
Momentum in the Wellington property market slowed in June with house sales falling at 8.5% pa, the largest decline in more than a year. House price growth of 16% pa has placed renewed downward pressure on rental yields, which now appear to be limiting investor demand for property in Wellington. Softer demand will lead to slower house price growth in the region.

CANTERBURY/WESTLAND PCI 1.35 (1.25 in the March quarter)
The modest upswing in the Canterbury/Westland property market continued in the June quarter, with house price growth at a 15-month high (12% pa). However, recent weakness in the number of houses selling (falling 7.1% pa), the strong exchange rate, and high mortgage rates will contribute to softness in the Canterbury/Westland property market in coming months.

« Auckland property prices steady in JulyBuilding consent numbers still high »

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.29 2.59 2.65
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 2.29 2.59 2.65
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
HSBC Special - 1.99 - -
Lender Flt 1yr 2yr 3yr
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.79 3.04 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
SBS Bank 4.54 2.79 2.79 3.15
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.29 2.29 2.65
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.79 2.99 2.80

Last updated: 4 March 2021 8:47am

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