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Investors coming off the fence

Squirrel Mortgages is confident yesterday’s OCR rise won’t have any upward impact on mortgage interest rates.

Thursday, May 25th 2023, 9:10AM 2 Comments

by Sally Lindsay

Squirrel chief executive David Cunningham says while house sales activity was absolutely anaemic over summer — the market has definitely entered a pretty healthy comeback phase in the last month or two.

In part, that’s down to the fact house prices are starting to stabilise, he says.

“Prices have now fallen about 20% in nominal terms, or 30% once you factor inflation into the equation, essentially taking us back to where they were pre-Covid.

“Commentary from the Reserve Bank is that those falls have done what was needed to get us back to a more sustainable space with house prices,” says Cunningham.

“And given interest rates are likely to start falling in the coming months, I think we’re going to see investor housing turnover gradually pick up more and more from here.”

He says while people might sit on the fence when there’s cause for uncertainty, their fundamental need for housing never goes away.

“Now those causes for uncertainty are starting to disappear, investors will be back on the hunt to buy. And now the tap has been turned on again with respect to immigration, you can bet that’s going to add even more fuel to the housing market fire.”

Cunningham says it won’t necessarily mean prices shoot back up, but choice is going to start to disappear for buyers — something that has been warned about for months.

“In fact, he says demand is heating up in a massive way in the rental space.  In Auckland rentals are being snapped up so quickly there’s barely anything going at the moment — meaning the market could be on track to follow in the wake of Sydney, Melbourne and Brisbane, which are deep in the midst of a rental crisis.

“And the sad irony of it is that, as demand picks up again, we’re systematically destroying our construction sector at the same time.”

Cunningham says the sector should be supported to maintain the levels of consents and building highs hit last year — to help stay ahead of immigration levels, and maintain sustainable house prices.

“Unfortunately it’s the same mistake New Zealand makes every time we go through this sort of housing market cycle. Hopefully one day we’ll learn.”

Tags: Squirrel

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Comments from our readers

On 26 May 2023 at 11:37 am valkyrie6 said:
I disagree with David and think it’s negligent to not also consider that property values could actually drop further.
So GFC average property prices were $ 425,000 then between 2010 and 2016 they increased in value by 29%, then again from 2016 to 2020 another 20% , then Govid 2020 to 2022 another 44% , the post 2020 boom in property values is one of the strongest experienced on record.
If nationwide they have only dropped back 20 % on average, then I think there is way more room to move down and why would we think they could not.
David need to talk people at the coalface, real estate agents and mortgage advisers and they will confirm its dead out there and not showing signed of recovery.
On 30 May 2023 at 11:53 am Amused said:
House prices starting to stabilise? I don't think so.

Ask any land agent what is happening currently in the market and they'll tell you the majority of homes are still overpriced for the mortgage rates we have now and what most people need to borrow from a bank. They are not affordable for many purchasers.

Vendors who are postponing a sale of their property until the Summer or next year hoping that they will get a better offer then are out to lunch.

As valkyrie notes above house price inflation during the pandemic was unprecedented been driven by very cheap interest rates which are no longer available to borrowers. We have not seen the end of house prices falling.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 ▼6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 ▼6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 8 April 2024 9:21am

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