Housing market madness. What to do?

When I wrote in early December, I said I’d be available to help with your mortgage enquiries over the summer break. That turned out to be prescient.

The housing market has continued on its frantic run, with a steady stream of deals being finalised during the holidays. These are not normal times, so I thought I’d share some thoughts on navigating the current market - lockdown or no lockdown.

Here they are, in no particular order:

Congratulations to those who kept house-hunting over the break.

Bevan and I were pleased to help a number of clients land properties over the break while other buyers were taking time out. As Bob Jones once said, when everyone is buying, he goes fishing, and vice versa.

It pays to be like Bob Jones – in this respect, anyway.

Don’t buy into FOMO.

Fear Of Missing Out is driven by the media. It can even lead people to feel that if they don’t buy right now they will never get into the market. 

But remember, there will always be properties coming up for sale. Babies will be born, couples will get married (and split), older people will downsize, and deceased estates will need to cash up. 

Take a deep breath. Look at all your options. And read my final tip below.

First-time buyers should look at new builds.

The traditional route into home ownership was to buy a tired house and do it up. However, these properties are being snapped up by investors looking to bowl the old dwelling and replace it with townhouses. 

So where should first-time buyers look for that starter home? We suggest buying in a new development.

About 80% of the first-time buyers we’ve dealt with recently have purchased new builds. Because these properties typically aren’t sold at auction, you won’t get caught in a bidding war with cashed-up families or investors. And there’s no need to burn money on endless buyer’s reports. 

LVRs are coming back…

The banks have been told, once again, to restrict lending to those who don’t have a decent-sized deposit. So they’ll be looking closely at Loan to Valuation Ratios (LVRs). If this affects you – and you need to buy soon – keep that in mind.

…but supply is catching up to demand.

The single biggest factor behind price rises is too much money chasing too few houses. We simply haven’t been creating enough new dwellings in New Zealand for everyone who wants a home. 

However, the statistics show that building consents were up 4.8% in the 12 months to December 2020. That might not seem a lot, but remember we’re still in a global pandemic that has caused massive economic disruption.

Just driving around Auckland will reveal multiple new homes popping up on sites that have been zoned for intensification. Buyers should hang tight and not give into FOMO.

Our single most important bit of advice.

Come and see us before you start looking at properties.

The banks are swamped and taking weeks to process mortgage applications. You need to have your finance lined up before you start putting in offers. The really organised buyers make their lives easier by having their three latest pay slips and all the other paperwork required these days.

As my accountant friend Mark Withers says, “Winning the game means understanding the rules.” The rules keep evolving – but we know what they are.

And we’ll help you win the game.