The housing market is in the doldrums with sales volumes and prices down sharply over recent months.
However spring is just around the corner and typically banks and real estate agents strive to spruik housing market activity as the days get longer. According to the Real Estate Institute of New Zealand (REINZ), seven of 16 regions recorded record median prices in September 2021, and nine did the same in September 2020.
Although the market is currently very weak, inflation high and the Reserve Bank is hiking the Official Cash Rate (OCR), banks have recently been trimming some mortgage rates after a sharp rise from July 2021.
So what will this spring bring? Keeping in mind the latest monthly REINZ figures, for July, show REINZ's House Price Index down 11% from the peak last November, sales volumes down 37% year-on-year to 4,678, the median number of days to sell up 16 to 47, and inventory up 108% year-on-year to 26,358.
Speaking to interest.co.nz after Kiwibank posted its annual financial results, CEO Steve Jurkovich suggests there may be a pick up in activity in spring, but not at the levels of recent years.
"I do think there's something that happens around people feeling a bit better about themselves with warmer weather and a bit of sunshine, and getting out and seeing properties that have been prepared for that time. So I would expect an uplift. [But] I'm not sure it's going to be the same as over the last few years," Jurkovich says.
"We will see, I think, peoples' confidence come back. I think people will look around and say 'there's pretty good overall support, there's good employment, yes interest rates are higher than they were before but actually if you have been around a while they're probably more normal than not, so actually let's get on with life'."
Asked if Kiwibank has a spring lending push planned Jurkovich says the big push for the bank is growing its advisory network.
"We've added 80 new mortgage broker advisory groups over the last 12 months, we're looking to add more than 250 next year. So I think the way we look at the market is actually customers are choosing to use advisers when times are a bit trickier, whether that be through regulation on CCCFA [Credit Contracts and Consumer Finance Act], or whether that be about market conditions and interest rates. So we think we can increase our reach and be in front of customers, even if those customers choose to be in front of a broker," Jurkovich says.
"Yeah, we are pretty active but it's really about a doubling down on that commitment, that we will partner to grow."
Jurkovich notes that, with the Reserve Bank having increased the OCR by 50 basis points to 3% on Wednesday, Kiwibank's set to review its serviceability test rate, the interest rate it uses to stress test mortgage applicants' ability to service their loans. It's currently at 7.25%, and may be increased, potentially to 7.45%. A higher test rate will typically reduce the amount of money a bank is prepared to lend to a borrower.
ANZ, the country's biggest mortgage lender, currently has its mortgage serviceability test rate at 7.95%. ASB CEO Vittoria Shortt recently told interest.co.nz her bank's one is at 7.85%. ASB is NZ's second biggest mortgage lender.
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