Home buyers sitting on the sidelines waiting for the right conditions should jump into the market now to take advantage of falling mortgage rates and a surge of new listings before others do, Raine & Horne New Zealand says.

 Ian Keightley, Head of Operations, Raine & Horne New Zealand said: “A lot of qualified people have been putting buying a property on hold, waiting for the market to turn. When interest rates are cut as they have been this month, with the prospect of more cuts to follow, we typically see an uptick in house prices and buyer confidence as the reality of reduced rates draws more people into the market.

 “My advice to buyers sitting on the sidelines is to get moving, before the spring market picks up steam, but be strategic about it. The best time to buy a house is right now. There is more supply, and the bottom has been hit. The first movers get the best buys and have more choice - be among them,” Keightley said.

This comes as research from CoreLogic shows Aotearoa house affordability metrics, such as the time needed to save a deposit, are at their lowest since COVID, and low deposit mortgages are helping to drive increased first home buyer activity. CoreLogic NZ’s latest Housing Affordability Report has found the median property value across the motu had fallen to 7.7 times the gross annual median household income.

CoreLogic NZ Chief Property Economist Kelvin Davidson said the value-to-income ratio had fallen from 7.9 in Q1 2024 and was at the lowest level since early 2020. “The improvement in housing affordability reflects the sharp falls in property values that we’ve seen over the past 2-½ years as well as the steady growth in incomes over the same period,” he said.

The time required to save a deposit measure had also improved from 13.6 years in Q4 2021 to 10.2 now, although still above its average of 9.1 years. Mortgage payments as a percentage of median household income remained at 54%, close to the peak of 56-57%, and well above the average of 43%," Mr Davidson noted. 

Tauranga remained the least affordable main centre with a value-to-income ratio of 9.0 in Q2 2024, down from the peak of 12.3 in late 2021 and early 2022. Auckland was the second most expensive main centre, with an improved value-to-income ratio of 8.2 and years-to-save figure of 11.0. Both figures are down significantly from their peaks of 11.6 and 15.5 in late 2021. Wellington and Hamilton were the 'cheapest' among the main centres with value-to-income ratios of 7.0.

Meanwhile, CoreLogic’s latest Housing Chart Pack shows first home buyers (FHB) are maintaining near record market share despite affordability challenges. The share of property purchases across Aotearoa by FHBs increased to 27% in July, up from 26% in Q2 and well above the long-term average of 21%.

Mr Davidson said FHBs were clearly taking advantage of the low deposit lending allowances being offered by banks. Two in every five FHBs get into the property market with less than 20% deposit, and the RBNZ’s rate-cutting cycle was likely to reinforce their presence, he said.

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