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    Post-lockdown 2020, New Zealand’s housing market took an unexpected turn. Price falls of 15% were predicted nationwide but instead, houses saw a 25% price increase, with the median price rising more than $200,000 in one year. So, what’s the forecast for post-pandemic property this time around? And can we rely on those predictions to be accurate?
    We’ve examined what to expect from property beyond Level 4.

    Post-2020 lockdown house boom

    Just when we thought house prices couldn’t go any higher, the pandemic hit – pushing them up. Now, New Zealand has the most unaffordable housing market out of 37 members of the Organisation for Economic Co-operation and Development (OECD).

    When New Zealand eliminated COVID for the first time last year, interest rates plummeted. Money had never been cheaper, which encouraged more people than ever to invest in property. The pandemic also brought thousands of Kiwi ex-pats home, putting pressure on an already suffocating housing market.

    Competition was high, houses sold faster than they could be listed and predictions of low house prices were out the window.

    A struggle to get on the ladder

    A strong property market is great for our economy, but not so great for those trying to get on the ladder. Currently, the only people benefitting from the housing boom are those already in the market. Anyone who doesn’t currently own a home won’t have much chance of getting there in the current climate – unless they have $200,000 in hand or a parent willing to help.

    Looking beyond the pandemic

    Risks for homeowners

    As property prices increased much higher than incomes, people stretched themselves to snap up expensive homes with low interest rates. But when interest rates start to increase, we can expect to see people unable to afford their repayments. That could mean mortgagee sales or homes being sold for less to get them off people’s hands.

    The Delta variant has thrown another spanner in the works. Businesses that only just managed to survive the first lockdown now face further challenges. The government’s financial support will only go so far – and many business owners and their soon-to-be-ex employees may be forced to sell their homes.

    Opportunities for investors and first-home buyers

    Listings for homes were already starting to decline before this lockdown, and there’s been a shortage of homes to keep up with demand. Since COVID snuck back into the country last month, house prices have stalled.

    The Delta variant has caused a massive 52% drop in real estate activity since Level 4, as open homes, appraisals and auctions can’t go ahead. The unsustainable property prices have perhaps met their limit. So, what does that mean for property opportunities?

    As we see light at the end of the COVID tunnel, there are predictions the house price growth will continue to slow. We can expect a more stable market, without the huge price increases and panic buying. But we may also see a stall, with fewer people able to afford a home. Here’s why:

    • Higher interest rates
    Those already on the property ladder are now facing higher interest rates than when they secured their homes last year. But that’s also going to affect anyone looking to buy a home – interest rates aren’t as low, which means buying is less affordable.

    • Higher LVR ratios
    Last year, loan-to-value ratio (LVR) restrictions on low deposit lending were temporarily removed at the tail-end of lockdown, allowing people to buy with smaller deposits. That’s unlikely to happen again this year.

    • CCCFA
    Banks are now examining the income and expenses of a household while assessing the loan application with great detail. This means that it will now be harder to get the loan and perhaps banks will also approve lesser amount than someone wants.

    Opportunities in property post-pandemic

    After last year’s COVID-inspired house boom, Kiwis are on the edge of their seats to see what happens next. Predictions were far off last year, and the market soared instead of suffering. But with interest rates on the up, house availability on the down and our slowing population growth, it’s unlikely the housing market will return to anything like we saw last year. If you’re trying to get on the housing ladder, the time could be coming soon.

    Looking to buy? With twenty years of industry experience, we can help. Talk to a Global Finance expert today.