Aucklanders Plan Mass Exit To Buy Property

New Zealanders plan to get out of town to buy property – but expect house prices to continue to climb.

Nearly a quarter of New Zealanders who don’t own their home (23%) plan to pack up and leave town to buy a house, according to new BNZ research.

According to BNZ’s Financial Futures Research, 1 in 5 non-property owners also plan to buy property in a region other than where they live – but as an investment property to rent out, rather than as a home to live in.

“Applied to Auckland, that would mean that 300,000 Aucklanders (a city almost the size of Christchurch) are actively considering moving out,” says BNZ Acting Director of Retail and Marketing David Bullen.

“This helps to explain some of the pricing pressure throughout provincial New Zealand.”

House prices continue to grow

While the rate of house value growth is slowing thanks to the Reserve Bank tightening LVR rules, data from QV shows house values are still increasing across New Zealand, including in Dunedin and Nelson.

“Only six months ago we were talking about the impact Auckland’s housing market was having on neighbouring regions such as Waikato and the Bay of Plenty, and now we are seeing this flowing into other regions further afield,” Mr Bullen says.

Kiwis bank on continued house price spike

The majority of New Zealanders (62%) believe house prices in their region are overvalued, but they are banking on continued spikes to cash in on the market, according to BNZ’s research.

Kiwis bank on continued house price spike

The national median price increased 12.7% in the year ending October 2016 – but property owners expect prices to increase by 21%. Non-property owners (renters) are even predicting a 25% hike in prices.

However, Mr Bullen says it’s important to be realistic about money-making in the current property climate.

“It’s worth pointing out that rising house prices only make homeowners wealthy on paper. If you are selling and buying in the same market, then large profits are unlikely, unless downsizing or significantly changing location.”

Interestingly, only 1 in 3 Kiwis (36%) believe it’s a good time to buy a first home but more than 3 in 4 think it’s a good time to start saving for a first property.

“Kiwis’ underlying affinity with home ownership doesn’t seem to be shifting, it’s just about how and when you get into the market,” says Mr Bullen.

Banks separating from OCR movements

All eyes will be on the Reserve Bank on 10 November to see whether it follows through with the widely predicted OCR cut of 25 basis points from 2.00% to 1.75%.

Traditionally, banks have followed in line with the cash rate, with home loan rates either rising or falling depending on the OCR movement.

However, banks appear to be distancing themselves from cash rate changes. ASB has just increased its fixed-term interest rates for 3-year and 5-year fixed rate home loans.

When the Reserve Bank cut the OCR in August, many of the big banks increased term deposit rates, rather than passing on the full rate – as the Reserve Bank hoped – to borrowers.

The Reserve Bank will release its monetary policy statement along with the OCR announcement. The Bank has already signalled a rate cut.

Canstar follows and reports on each OCR announcement. So check the website for more details: www.canstar.co.nz/home-loans/

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