Sally Lindsay reports a net 35 per cent of mortgage advisers say they are seeing more enquiry from investors. This is well up from nine per cent in June, but that two-month change is less than for first home buyers in the market.

Alexander says while more investors are being attracted back into residential property, it’s still the case as it has been since perhaps mid-2021 that its first home buyers who are the prime movers.

“A high net 51 per cent of mortgage advisors are receiving more enquiries from first home purchasers. This is a strong turnaround from two months ago when a net seven per cent said that fewer enquiries from these generally young people were coming through.”

Banks are slowly easing up on their criteria for lending to borrowers generally, and sentiment in the country is improving now that a path towards less interest rates pain has become clear.

A net 57 per cent of advisers feel lenders are becoming more willing to advance funds. “This is an important result because the severe tightening up of credit availability in New Zealand over 2021 sparked the sizeable fall in real estate activity and prices from late that year,” Alexander says.

This is the strongest result in the four-year history of this survey.

Adviser comment

Comments made by advisers regarding bank lending to investors include the following:

• Lower test rates are increasing affordability.

• LVR changes (70 per cent for investors) have made it easier to use equity to buy the next property coupled with the test rates reductions. Rental income shading linked to tax deductibility is almost gone.

• No major changes in this space with assessment, however debt-to-income will be a factor moving forward as investment enquiry increases.

• No longer required to include rates and insurance in assessment.

With universal expectations that easing monetary policy will bring much lower mortgage rates, borrowers are fixing short in order to secure presumably a “low” medium to long-term rate when it looks like rates may have bottomed out.

“We cannot know when that point in the interest rates cycle will be reached and for now it seems reasonable to assume that most people will continue to fix short for a considerable period of time,” Alexander says.

Advisers are also receiving a high level of inquiry about mortgage refinancing. At a net 53 per cent of advisers reporting this, it’s the second highest result on record and likely reflects the changing interest rates landscape making people think about more active management of their interest rate reset exposure.

Prices, interest rates

Meanwhile, Auckland property prices have hit a four-year low, dropping below $1 million.

New Trade Me Property data shows in August 2024 the average asking price in Auckland was $986,750, down 1.3 per cent from July and the first time since September 2020 it sat at less than $1 million.

August marked the fifth consecutive month of declining prices for Auckland.

Trade Me customer service director, Gavin Lloyd, says September results should give an indication on whether it has been a difficult winter, or if drops are as a result of a more structural weakness in the housing market.

Nationally, the average asking price for August was down 0.8 per cent month-on-month and 2.3 per cent year-on-year to $818,250.

“We’ve not seen prices drop to this level since April 2021 and if we keep seeing consecutive falls, as we have done over the past five months, we could see the average price go below $800,000,” Lloyd says.

Highlighting that it might be a favourable time to buy, he suggests if buyers are on the lookout for a deal, this could be their moment.

“If everything is in place – with both prices and interest rates dropping – now could be the right time to make your move,” he says.

The regions

Of the 15 regions Trade Me Property tracks, only five have seen a year-on-year increase in average asking prices with four of those regions in the South Island.

Marlborough (2.8 per cent), West Coast (1.9 per cent), Otago (6.3 per cent) and Southland (5.5 per cent) all recorded increases over the year with Gisborne the only region in the north to show positive movement with the average asking price up 9.9 per cent to August.

Looking at the data on a month-on-month basis (July-August) it paints a similar picture with Hawke’s Bay being the only region in the north showing growth, albeit modest at 2.3 per cent. Whereas, in the south only the West Coast and Canterbury declined with falls.

“Gisborne is certainly an interesting region to look at particularly over the past six months. In February year-on-year prices were down 9.5 per cent yet come August they were almost up 10 per cent,” Lloyd says. “That’s a dramatic turnaround in a relatively short time period.”