Hamilton real estate agents say housing market is back to reason
He also says that fewer homes are selling under the hammer, with prices instead being negotiated after failing to hit set reserves. Only a third of the homes at Lodge’s December 8 auction sold under the hammer.
It comes after a wave of changes over the past few months that are impacting the Kiwis’ ability to secure a mortgage. This includes higher interest rates and changes in loan-to-value restrictions, which means fewer buyers will be able to secure a mortgage with a deposit of less than 20%.
In response to the changes, some of the country’s largest banks have started getting pre-approvals for borrowers with less than 20% deposit. A pre-approval is an acknowledgment from a bank that someone can borrow an agreed amount.
“There is still a lot of confidence in the Hamilton real estate market, but a definite shift is occurring. It’s a tough market to understand because there are so many variables in place, ”O’Rourke said.
His comments come after the Treasury predicted house prices would rise more than 10% in 2022 – after rising 29% in 2021.
The latest Treasury economic and budget update, known as HYEFU, shows house prices are set to rise 10.4% next year, which means the median house price will rise to more than $ 1 million bucks.
And it could be even worse. In the May Treasury budget update, it forecast house prices to rise 17.3%, but its latest update shows prices have risen 29%. This means that the 10.4% increase forecast for next year could turn out to be a major underestimate.
The 29% increase was the fastest since the 1980s. This happened despite near-zero net migration and booming residential construction activity that increased supply.
But the latest data from ASB Bank predicts a slight drop in house prices at the end of next year.
In a report released earlier this month, the ASB said it expected house prices to experience a cumulative drop of four percent next year.
“We now expect small declines in house prices in the second half of 2022. Given the dangers of house price forecasts, the cumulative forecast drop of around 4% should be interpreted more as a hat trick for the risk profile that a point forecast specifies. “, we read in the report.
“It’s also tiny in the grand scheme of the 35% to 40% surge in house prices since March 2020.”