With recent fluctuations in the market, many potential buyers are left wondering whether now is the right time to invest in real estate. In this article, Nathan Najib reflects on his predictions for New Zealand house prices made in late 2023, where he foresaw house prices gradually reaching their bottom. He now explains why those predictions appear to be coming true.
The official cash rate (OCR) in New Zealand currently stands at 5.25% (as of the August 14th, 2024 decision by the Reserve Bank of New Zealand). This rate influences borrowing costs across the economy, impacting mortgage rates and the housing market.
As the market shifts, we are approaching a buyers' market, particularly in regions where housing supply outpaces demand, such as Christchurch. This trend suggests that now could be a favourable time for buyers to enter the market.
We’ll be releasing a video soon discussing whether buyers should invest now or wait until 2025. Make sure to subscribe to our channel for updates.
Historically, New Zealand's real estate cycles last between four to five years or eight to ten years. The current cycle has been prolonged due to the previously low interest rates. Understanding this cycle is crucial for buyers, as we may be approaching the trough — the lowest point of the cycle — an ideal time to buy.
The typical real estate cycle includes growth, peak, decline, and trough phases. After a peak, it generally takes 18 to 24 months for the market to correct, followed by a stabilisation period of two to three years. While prices may still decline slightly, buyers can expect better deals as the market stabilises.
For a deeper dive into how the real estate cycle works, watch our in-depth video.
Last week, three of New Zealand’s top banks reduced mortgage rates ahead of the Reserve Bank's next meeting. Long-term rates for three to five years have dropped by 40 basis points to 5.99%, potentially signalling good news for buyers.
Lower mortgage rates make it easier for buyers to manage their financial commitments and may also offer opportunities for existing homeowners to refinance at better rates. However, buyers should remain cautious, considering their long-term financial plans before making a commitment.
Another emerging trend is the increasing number of New Zealanders considering a move to Australia for better affordability. While Australia may seem appealing due to perceived higher salaries, the reality of the property market there is different.
During Nathan’s recent visit to an Australian real estate agency, it became evident that demand remains high, and insufficient supply has driven up property prices. Although job opportunities in Australia may be better, housing affordability remains a significant challenge. Buyers need to carefully weigh the cost of living against potential salary increases before making any decisions.
Nathan Najib notes that Christchurch has shifted into a buyers' market, presenting opportunities for those looking to purchase. Sellers should adjust their expectations and be open to meeting the market, as waiting for a recovery may result in missed opportunities.
For sellers, holding out for a price increase could mean missing out, while buyers should feel confident in making offers on properties they’re interested in.
After the market reaches its bottom, a stabilisation period of approximately 24 months is expected before a gradual recovery begins. This recovery is likely to see annual growth rates of two to four percent, so timing is key for both buyers and sellers. Stay tuned for our YouTube discussion on how the new inflation and OCR rates, to be announced in October, will impact the Christchurch property market.
Participating in auctions can be daunting for first-time buyers, but confidence is key. Nathan Najib offers the following bidding strategies to help you succeed at your next auction:
The New Zealand real estate market is becoming more favourable for buyers, but careful consideration of long-term financial health remains essential. According to Nathan Najib’s insights, now may be the ideal time to invest, particularly for those equipped with strategic auction tactics. Although challenges remain, such as fluctuating interest rates and competition from other buyers, those who are prepared and confident may secure their dream property.
