Mortgage interest rates have been stable with major banks two-year fixed rates staying within the 4.82% – 4.84% range between February to August.
In Auckland, the fall in house prices combined with stable interest rates are expected to reduce the mortgage payments by $50.97 a week, according to the latest home loan affordability report from interest.co.nz.
New Zealand’s central bank may be facing the biggest shake-up to the way interest rates are decided since it pioneered inflation targeting three decades ago.
The main opposition Labour Party, which has a chance of victory in a Sept. 23 election that’s too close to call, wants the Reserve Bank to add full employment to its existing sole mandate of price stability. It also proposes policy be decided by a committee that would include external members, rather than the governor as lone decision maker.
Not a single region in the country experienced an increase in the number of properties sold for the year ended in August – a phenomenon that has only happened three times in the last seven years, according to the latest data from the Real Estate Institute of New Zealand.
In August, average asking prices dropped 2.1% in Auckland year-on-year, but rose 10.5% in the regions – suggesting New Zealand’s largest city to be more concerned about the election than the provinces, according to the latest Trade Me Property Price Index.
Hurricanes Harvey and Irma could leave New Zealand mortgage rates staying low for longer, according to the latest economic outlook from Goldman Sachs.
The pace of US interest rate hikes has a big influence on the value of the NZ dollar, share market and to some extent, mortgage rates, a report from the NZ Herald said.
The majority of New Zealand has shown little property value growth, according to the latest data analysis from CoreLogic.
Property values in Manukau have recorded the strongest growth at 29%– a continuation of growth for the rest of the Auckland region since 2012. North Shore was 5.7% behind.
In main centres where population pressures result in a huge increase in property cost, apartments are cheaper, in relative terms, and provide a viable ownership alternative to renting.
But apartment buyers could be left tens of thousands of dollars in debt after borrowing deposits for unbuilt units that they then cannot get the remaining funds for.
The property market needs to cool further while credit growth needs to slow to remove risks to the wider banking system, according to S&P credit rating agency.
S&P noted risks from house price inflation and credit growth have stabilised this year. These were evidenced by the loan-to-value ratio restrictions biting into demand for residential property investor mortgages and banks tightening their own credit since late 2015, a report from the NZ Herald said.
The agency wants to see that trend continue before it could comfortably say risks to the overall banking system have abated, S&P director of financial institution ratings, Nico de Lange said during a webcast.
“It’s more of a longer-term prospect, not within the next 12-to-18 months, and the key drivers will be house prices and credit growth that contribute to it,” de Lange said.
“Given the current environment, we’re of the view that there still needs to be some cool down in these factors to take it to the next level.”
The slowdown in the property market was driven by Reserve Bank’s imposition of LVR restrictions on investors combined with banks dialling back their willingness to lend, the report said.
The NZ Herald said Real Estate Institute figures on Friday will be the last steer on the property market before the general election.
The downtrend occurred long before the elections – which is not a main driver of the slowdown and will not ramp up activities once over, S&P associate director of financial institution ratings Andre Mayes told the NZ Herald.