Based on a report from CoreLogic New Zealand, mortgage lending activity in August surpassed levels from a year ago, marking the first annual increase in approximately two years[i].

Part of this early-stage recovery relates to the loosening in the loan-to-value ratio rules from 1 June. Looking ahead, more growth in lending activity (and property sales volumes and house prices) seems likely, but it might still be subdued by past standards.

The latest data from the Reserve Bank of New Zealand (RBNZ) showed $5.8 billion of gross mortgage lending activity in August, up by $0.4 billion from a year ago. This is the first annual rise in lending volumes since August 2021. (These figures cover new loans, top-ups, and bank switches, but not existing loans that are being repriced).

Kelvin Davidson, Chief Economist CoreLogic NZ, said “Within that overall total, the breakdown of the figures showed that owner-occupiers borrowed more this August than the same month last year, but investors were on par with a year ago. That softer performance from investors is hardly surprising, given the cashflow pressures on an investment purchase arising from low gross rental yields and high mortgage rates.”

The latest developments regarding mortgage lending reflect a continuous upward trend in property sales volumes, noted CoreLogic. For the fourth consecutive month, there has been an increase in property sales, with August’s numbers showing a 5.5% year-over-year rise when considering both agent-led and private transactions. While the total volume remains modest compared to typical standards, the New Zealand market has entered the next phase of the housing cycle.

Keith Niederer, General Manager NZ, Raine & Horne, said the increase in mortgage lending activity in August, surpassing levels from a year ago, is an encouraging sign for the New Zealand real estate market. “This marks the first annual increase in lending in approximately two years, indicating that the market is gradually bouncing back.”

Another trend that remains in play is the low number of new listings coming onto the market each week, even though the market is now into the traditional ‘Spring lift’. Keith noted, “As sales volumes increase, the shortage of new stock is causing a decrease in the number of properties available on the market. This will lead to a gradual tightening of options for buyers in most regions.”

For all your real estate sales and property management needs this spring, contact your local Raine & Horne office. 

[i] https://www.corelogic.co.nz/news-research/news/2023/mortgage-lending-flows-rise-for-the-first-time-since-2021