Raine & Horne Blockhouse Bay | Titirangi
R&H
You are viewing an article that is not currently active

Property market awaits impact of regulatory changes on listings and values

July 8, 2024

All eyes are on key real estate markets across the motu to see if new regulatory changes torpedo 18 months of national house price stability.

 Industry leaders believe the July 1 changes that included new debt-to-income ratios (DTI), looser loan-to-value ratios (LVR) and the introduction of a relaxed two-year brightline test on top of earlier changes to interest deductibility could lead to a surge of new listings and potential downward pressure on house prices.

The number of houses for sale across Aotearoa in the year to June has already increased 28.6% and remained above 30,000 for five consecutive months, according to Realestate.co.nz. The company’s CEO Sarah Wood, said anecdotally, real estate agents had reported a backlog of properties waiting to be listed once the new brightline rules took effect this month. After this, newer owners struggling with high interest rates no longer have to pay income tax on sale gains.

CoreLogic NZ Head of Research, Nick Goodall said that while the shortening of the brightline test could see a further lift in already high listing levels, he did not expect the loosening of LVR policies to lead to a flood of newly eligible buyers, noting the impact of high interest rates and affordability challenges.

 The share of average income required to service a typical new mortgage in Auckland was 55%, compared to 43% in Dunedin. “Mortgage holders should continue to prepare for similar levels of interest rates for the rest of the year, and homeowners for the market upturn to underwhelm, especially with job security now declining,” he said.

 Keith Niederer, General Manager, NZ, Raine & Horne, said downward movement in the OCR would be the biggest catalyst for significant real estate market changes but noted the RBNZ would first want to see proof that sticky inflation was firmly under control.

 In the meantime, Kiwi property investors and homeowners looking to sell faced a challenging environment with a surge in rentals and new listings and a further listing surge possibly on the way, with interest rate relief unlikely in the short term.

 “Sellers need to choose experienced real estate professionals who know how to make their property standout and use effective marketing and pricing strategies to attract the best offers. Sellers also need to have realistic expectations given that new DTIs limit how much most buyers can borrow to six times their income. On the other hand, cashed-up buyers need agents who can help them make the most of their increased bargaining power and leverage it firmly for price savings,” Niederer added.

 Whether you want to sell or buy a property, don’t hesitate to contact your local Raine & Horne office.