House prices continue to climb nationwide with values increasing over 10% in the last year to date, and 27% higher than at the last peak in 2007.
Auckland leads the upward trend where prices have increased over 56% – that’s 33% above 2007 levels. It is expected average house prices will rise to over $1 million by next year.
Price increases are largely being driven by population growth and low supply, overseas investment interest, and also plunging interest rates. Recently the banks responded to cuts in the official cash rate by offering rates as low as 4.65% fixed for two years, and the word is that it may continue to drop.
Legislation around LVR restrictions is now due to commence on 1 November. The new rules have already been implemented by the banks affecting investors in Auckland property who are now required to have a 30% deposit.
Interest rates continue to fall and banks keep offering lower and lower rates.
While the Reserve Bank recognises further cuts in interest rates may only continue to stimulate demand especially in the Auckland market, raising interest rates would be inappropriate given the wider economic conditions.
The next announcement is due in a few weeks, and we expect to see a reaction by the banks shortly afterwards as we’ve already seen twice this year.
It is always worth contacting us to ask the bank what discounted rates you can get. Even if you are already fixed, the savings you can make on a lower rate can often cover the break costs – and more – and save you money in the long run.
All you have to do is send us a quick email asking us to review your Interest rate, quoting your account number, and we’ll get the best discounted rates organised for you.
Higher Deposits for Rental Properties
New LVR restrictions for investment property in Auckland are now to come into effect from 1 November. However, the Reserve Bank has made it clear it expects banks to implement them now. Most banks already require investors in Auckland to have a deposit of at least 30%.
Consequently we have since seen an increase in activity amongst investors looking further afield for rental properties.
With the Auckland house prices so high, increasing interest for investors is growing outside Auckland, especially in centres such as Whangarei, Hamilton and Tauranga.
Cheaper house prices, better yields and lower LVR expectations make investment outside the Auckland region very attractive.
We hear 50% of homes in Hamilton are owned by people living outside the city.
Your AIM Financial Services Team
|Kerry Alcock - Registered Financial Adviser|
M: 021 687 502
|Nick Alcock - Registered Financial Adviser|
M: 021 879 077
|Mark Miller - Registered Financial Adviser|
M: 022 183 5011
|Helen Dong - Registered Financial Adviser
M: 021 152 1969
|Waara (Toni) Varley - Registered Financial Adviser|
M: 021 176 1821
|Tahei Simpson - Registered Financial Adviser|
M: 021 507 073
|April Shen - Registered Financial Adviser|
M: 021 281 0666
|Matthew Lewer - Insurance Adviser and Registered Financial Adviser
M: 021 387 502