Adviser: Still leads if you know where to look
The winter blues have continued for the New Zealand property market, with mortgage advisers saying they have seen fewer first-home buyer enquiries this month, according to the most recent adviser survey from economist Tony Alexander. However, investor activity is starting to trend up.
On a scale of -100 to +100, where 0 would represent an even number of negative and positive responses, a net 7% of mortgage advisers have said that they are seeing fewer first-home buyers making enquiries.
This is a deterioration from a net 2% negative last month and the weakest result since January last year.
The measure is now well away from the net 46% positive result in February and reveals one of the starker deteriorations in Kiwi economic engagement from early this year.
However, not all advisers are experiencing decline in first homebuyer leads, with Cameron Muggeridge (pictured above), partner and director of Loan Market Central, seeing “lots of enquiries” at varying price points.
“This is probably on the perception that we are on the other side of the peak of rates and the viewpoint that there may be some good opportunities to get a high-value property for less capital outlay in previous markets due to some potential vendors potentially being in the position where they need to sell,” Muggeridge said.
Waiting for a rate cut
While the official cash rate (OCR) was left unchanged at 5.50% for the eight meeting in a row, the Reserve Bank of New Zealand (RBNZ) has announced last Wednesday, the wording of the Committee’s statement pointed towards rates easing.
With inflation getting under control, the consensus has switched with many expecting a rate cut this year.
Muggeridge believes that is the perceived viewpoint from existing homeowners, investors and first-home buyers.
“The astute purchasers see that as a time to purchase as if rates decrease further that usually results in higher prices,” Muggeridge said.
However, he has also seen others that have existing debt aren’t looking to buy and are just focused on reducing debt.
“They are in the mindset 'survive to 25' as it is tough out there for some people,” he said.
While other advisers are seeing less activity during these trying times, Muggeridge said he has had success generating leads through being active within social media groups.
“It can be a really effective way to pick up new business,” he said. “Holding a FHB seminar can be a good way to educate people on how you can help them through their journey.
“Running a small marketing campaign at the local coffee shop is not a bad idea, either, to obtain more interaction in the community.”
Investor activity up
In terms of investor activity, a net 9% of advisers have reported seeing more investors looking for advice.
This is a small improvement from a net 7% last month but is still well down from the recent peak at 42% in December last year.
Why might this investor reading be stronger than that for first-home buyers?
Alexander’s analysis suggested it’s because of the surge in job insecurity revealed in his monthly survey of real estate agents depressing young buyer demand particularly but hopes of canny counter-cyclical purchasing bringing some investors into the market.
The easing of minimum investor three deposit requirements from 35% to 30% of purchase price may also have slightly helped.
With the bright-line test implemented on July 1 along with LVRs and DTI restrictions, Muggeridge had recently seen enquiries for restructuring to better improve the tax deductibility of existing portfolios.
“We are also seeing investors look for opportunities to buy existing properties since the law change April 1 about deductibility. However, they are being picky on what they are purchasing, to make sure it fits requirements.”
While lodgements and approval numbers are up, Muggeridge also noticed that many people are looking but not buying. Again, this could be a wait and hold strategy until interest rates come down.
“We have seen a surge in approvals since probably December 2023, but the lag to acquisition is longer which therefore has meant a lot more nurturing is required from advisers and the support team,” he said.
“Days on the market for property appear to be a little longer from what I have been hearing from agents in comparison to most recent years, meaning they are also having to really work for the sale as of late.”
