Home Loans

Pauly’s Property Update January 2021

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The current economy is pumping due to New Zealand’s COVID-19 response – our country has never been more desirable.

Many people living overseas want to come here and buy property, alongside ex-pats returning to do the same.

With demand exceeding the available supply of homes, I predict the property market will likely keep booming and increase roughly 10-20% this year – provided New Zealand remains stable with our COVID response.

Another factor in the current demand is how stable employment is at present, which gives people more confidence to buy property. My advice right now? Don’t rush into buying something to invest for the sake of it.

However, there are still bargains to be found, so if you find a good opportunity, act fast to secure it. But before you do anything, it’s essential to do your research and the numbers: repayments, rental income, property maintenance etc. Personally, I have never bought property purely to gamble on the capital gain – only to hold for the long-term.

On the bank front, late last year, we saw ANZ release a 40% LVR requirement for investors. Most of the major banks will likely follow around March/April this year, which means it will make it a lot harder for hardworking Kiwis to purchase an investment property.

They’re doing this to try and stablise the property market, but it won’t fix our housing issue. At the end of the day, we lack a supply of good housing. There are also new laws for landlords emerging in 2021, which may affect investors and potentially the property market.

In conclusion, if you’re a first home buyer, it’s still a great year to get on the property ladder – but it’s a matter of waiting for the right opportunity. Yes, it’s a little more expensive at the moment, but don’t be discouraged. Talk to an experienced mortgage adviser to help you make a plan to help you achieve home ownership.

If you’re a property investor, a lot will change this year based on the Reserve Bank and government rules. Make sure you do your numbers and get everything cashflow positive for your investment, and have a chat with a mortgage broker to be sure you’ve got the best loan structure in place to help you ride out the crazy year ahead.

While we’re home loan and insurance experts, our blog posts are for general information purposes only and are not intended as financial advice. If at any stage you need personalised advice, get in touch on 0800 346 765, or email finsol@finsol.co.nz.


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