Over the past month the property market has remained at the forefront of news headlines, so here’s an important reminder of recent key points:
- Property values are still rising rapidly – in May they were more than 20% higher than a year ago (on the CoreLogic House Price Index)
- However, there are hints that sales volumes are starting to cool, due to previous measures such as 40% deposits for investors, but also due to
the simple lack of listings/choice - The Reserve Bank ‘surprised’ economists by publishing a clearer forecast that (in response to inflation pressures) the official cash rate will
start to rise from the second half of next year – which of course suggests upwards pressure on mortgage rates - The latest GDP figures were stronger than expected, which if anything hints that the timing for any increases in the cash rate could actually be
sooner than June next year - The Government opened the consultation on their tax changes, especially in regards to what constitutes a new-build property, and how long the ability
to claim mortgage interest deductibility on those properties might run for - The Government has approved the RBNZ to use caps on debt to income ratios for new mortgages, which potentially could be set at seven for owner-occupiers
and six for investors – but note these wouldn’t kick in until November at the earliest, and may not actually be used anyway (if the market
has slowed by then, as we expect)
In addition to all of that, our own Buyer Classification series for May showed that mortgaged investors’ market share of property purchases has continued
to ease back down, from 29% in Q1 2021 to 25% now. To me, this signals that the higher deposit requirements are...
