Talk Of The End Of The Housing Boom?
What’s being said about NZ house prices and the housing boom?
ANZ Chairman Sir John Key recently shared his view that the NZ housing boom is coming to an end. He cites many reasons for this, all of which are sensible. Now, he isn’t predicting a housing price crash. He is only saying that the “rapid rise in house prices is not sustainable and it can’t and will not continue”. We can probably all agree on that! He further said “I don’t know that we’ll see a tremendously big correction. But I think the boom run’s over.” Hardly a forecast of plummeting house prices.
However, due to Sir John Key’s comments and the general discourse in the media, we’re finding some prospective homeowners are worried about getting into the market now, at what may be the peak of the boom. Concern about what the property market will do is understandable. It’s something that buyers worry about at any time, not just right now. But we’d argue it’s not a good reason to put home ownership on hold.
When is the right time to buy a house?
There have always been fluctuations and periods of stagnations in the property market. And if you’re looking to flip properties quickly, then timing is everything. But if you’re looking for a long-term investment or simply to get your own home, the best time to buy is yesterday.
Over time property has always appreciated, and there is nothing happening today to suggest this won’t continue to be the case in the long run. There is a saying in the industry “timing in the market is less important than time in the market”. Meaning it’s more about how long you own property for, rather than the state of the market when you bought the property.
Yes, you may buy a home, then find you could have got a similar property for cheaper if you had waited. Or you might wait to buy a home only to find the market doesn’t do as expected and continues to go up.
Economists can’t tell the future. They can only guess. In recent years those guesses have largely been wrong. Economists were predicting a depressed housing market in COVID-19 times. Instead, the market heated up to an unprecedented degree.
How do you decide whether to buy during a property boom?
A good thought experiment is to imagine how you would feel if you ended up buying a home you could have bought cheaper if you’d waited. Alternatively how you would feel if you waited and missed out on getting into your own home at all.
There’s no doubt it is a challenging time to get into the property market. Interest rates are going up and some banks are lowering their debt-to-income ratios. There are more hoops to jump through and the banks are taking longer to review and approve loan applications. These aren’t reasons to give up, but they are why it’s important to get the help of a mortgage broker. A mortgage broker will navigate the process and maximise your chances of a successful application.
Platinum Mortgages has a great track record of successful outcomes for our clients, get in touch today to discuss your situation and to discover how we can help.