Here's why waiting might pay off
The current housing market presents challenges for buyers, and mortgage advisers play a crucial role in helping clients make informed decisions.
Ed McKnight (pictured above), economist at Opes Partners, wrote for OneRoof about six key reasons why your clients might want to pause before purchasing a property right now.
Property prices aren’t showing a clear upward trend
While property prices rose 0.5% in October after a 1% increase in September, the typical spring price bump makes it unclear whether this growth will continue.
“Yes, many banks are forecasting house price growth in 2025, but forecasters are often wrong,” McKnight said. “Property prices could go up, but they could also fall or remain flat.”
Interest rates remain high
Despite recent decreases, interest rates are still high enough to restrict borrowing power.
According to Infometrics, the mortgage on an average-priced house could consume nearly 50% of the average household’s income. For investors, rental income often doesn’t cover costs, leaving them to fill the gap.
House prices are stretched compared to incomes
The average house price remains seven times the average income, raising questions about how much higher prices can realistically climb. With affordability so stretched, buyers must weigh the risk of overextending themselves financially.
Rental market challenges
Finding tenants is becoming more difficult. A net 21% of property investors report struggles finding good tenants, according to Tony Alexander’s survey with Crockers. Longer vacancy periods, especially in Auckland, can create added financial strain for new investors.
Global uncertainty
Donald Trump’s return to the US presidency introduces economic unpredictability. Potential tariffs could increase inflation, putting upward pressure on interest rates.
“Taking out a big mortgage requires certainty, and right now, we don’t know what impact global events may have,” McKnight said.
Developer instability
Some developers are facing financial troubles, with major firms downsizing or seeing reduced activity. For buyers, this increases the risk of projects not being completed, which could result in lost time and complications despite deposit refunds.
Make an informed decision
While property tends to increase in value over the long term, the current market presents challenges that can feel daunting. McKnight advised weighing the pros and cons to make a decision that aligns with your circumstances.
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