The latest monthly mortgage figures are showing a 4% seasonally-adjusted rise, according to the Reserve Bank (RBNZ).
In February 2024 there was $4.915 billion worth of mortgage money advanced, which is just over $1.5 billion more than was advanced in January. But of course January is traditionally the low, on-holiday point.
It's more significant that after the RBNZ has taken seasonal patterns out of the equation it says that the mortgage advances were up 4%.
What we can very legitimately do is compare the latest month's figures with February of last year. And the latest figures are up a whopping 28% on the $3.836 billion reported for February 2023. But, yes, last February's figures were indeed the smallest recorded for a February by the RBNZ since it started publishing this data in 2014.
However, notwithstanding that, the latest February figures do perhaps hint at the return of a more 'normal' market - albeit one that is certainly not on fire.
On interesting point of note throughout the big slump we've seen since 2021 is the continuing enthusiasm of the first home buyer grouping.
The FHBs have continued racking up borrowing amounts numerically not far shy of the levels they were borrowing during the bull run, while increasing their monthly share of the total amount borrowed - as that amount withered.
The FHB's hit their all-time high (since this data series started) of 25.2% share of the mortgage money for December 2023.
It's looking increasingly as though they could have found their ceiling though.
The FHB grouping saw its share of the overall borrowing in January 2024 slip down to 24.1% - and it's fallen again in the latest month.
In February the FHB's did crack the billion dollar mark for the 11th time in the past 12 months, with $1.109 billion.
However, their total share of the spoils was down again at 22.6%. Maybe their are waiting and hoping for some mortgage interest rate relief later this year. The financial markets of course reckon that the RBNZ will start cutting the Official Cash Rate - presently at 5.5% - in August. But there's a lot of water to go under a lot of bridges first.
What then of the investors, who know have a more investor-friendly Government in place?
Well, if they are getting more interested, they are not showing it yet.
Investors borrowed $851 million in February 2024 and that made up 17.3% of the total mortgage money advanced - which was down on the 17.8% this grouping borrowed in January 2024.
The share of new mortgage commitments to other owner occupiers increased to 58.6% in February from 56.6% in January.
The RBNZ reports that there were 14,391 new mortgage commitments in February, which was up 39.3% from 10,334 in January and up 25.5 per cent from the 11,468 commitments in February a year go.
In February 2024 the average new loan value across all borrower types increased to $341,533, up 3.4% from $330,269 in January 2024.
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The latest monthly mortgage figures are showing a 4% seasonally-adjusted rise
In February 2024 the average new loan value across all borrower types increased to $341,533, up 3.4% from $330,269 in January 2024
Could explain why house prices have been increasing slightly recently
not too fast in judging the numbers. comparing Feb to Feb last year, yes numbers are up. but last year was one of the lowest point in history.
so far the market has stablized, I am not sure it's normal yet. or perhaps the cool feel in the market is the new normal, who knows.
Yesteryears investor has awoken to a market that lacks powerful volume driven upward momentum. It's much much harder for them to flip quick to bigger fools and it's just not fun. Its a classic rude awakening really. TD yields are remaining higher for much longer and current rental yields do not make a good comparison even after restoration of interest deductions. Despite the well documented accommodation shortages, time has proven what many here already suspected, Landlords have been unable to pass on escalating costs of owning. The thought of guaranteed tax free capital gains was obviously the main driver of many short sighted newbie investors decision to buy and no doubt ones lucky to have remaining equity will be eyeing up 01-July to exit...
I think extending Brightline beyond 2-years accentuated the drought in listings. This coincided with cheaper money. The removal of such during times of increasing financial stress will likely cause the reverse at a time our economy mired in a recession and highly vulnerable. At the end of the day, homes are for living in and raising families, not for speculating on. Our country is not so productive these days.
RT - most late to party so called property investors are simply bag holders to those who understand the cycle... some even managed to sell at 4k per sq m , sight unseen ! to so called developers..... now almost every company in NZ is cutting all contracters AND 5-10% of staff... H2 2024 is going to be a cluster as people HAVE TO sell, buckle up, your not in kansas anymore
RT = Retired Trader
Those dim PI are Riders on the Storm
"Riders on the storm
Into this house, we're born
Into this world, we're thrown
Like a dog without a bone
An actor out on loan
Riders on the storm
There's a killer on the road
His brain is squirmin' like a toad
Take a long holiday
Let your children play
If you give this man a ride
Sweet family will die
Killer on the road, yeah"
At the end of the day, homes are for living in and raising families, not for speculating on.
In capitalism, everything is speculated on. What do you think the interest born on your savings is being used for, saving kittens?
If it's deemed an essential, that makes it less susceptible to fleeting consumer interest.
mmmm only unregulated capitalism, which seems to be unpopular with even with NACT voters...... you are showing your male, pale and stale historical bias.... maybe affinity bias to others who have made such profits
its called reversion to the mean baby, ie you should have sold at the top and have buy orders at the support level less 5-10%, imho thats once resi becomes cash flow positive again at a mortgage rate of about 5.85%... do your math.
mmmm only unregulated capitalism
If the whole thing is regulated, it's not really capitalism, more like a command economy.
And if anything, regulation is helping the inflation of existing housing, because it deeply restrains supply.
you are showing your male, pale and stale historical bias.... maybe affinity bias to others who have made such profits
What we're seeing with our housing market is not a new phenomenon, at all. Things like what we're experiencing now have been occuring for centuries, if not millennia:
- money becomes abundant
- production moves elsewhere
- money flows into assets
I'm merely pointing out how everyone loves capitalism, until parts of it aren't working in their favour.
If I've a bias, it's towards establishing truths, rather than sugar-coating things. Houses are too expensive. I don't think that's going to get fundamentally addressed, in any lasting, meaningful way, anytime soon.
Good news is, the future can prove me wrong, and then I can learn from it.
Cheers for the 1000th reminder.
We'd still be standing in a fairly similar spot though. A lot of people's ability to service rent falls far below the cost to generate a new house for them to live in - hence why the government subsidises, they can't afford to provide it themselves.
Can I ask what rate you are getting on your term deposit RP? You have talked it up considerably but from my research the rates have barely gone above 6%. After tax this doesn't even offset inflation in my situation. Are you with a non mainstream bank or did you negotiate a better rate?
You could use the leverage on something that's income bearing (i.e. a business or income generating assets). Given you have a young family you are going to need the liquidity.
But probably in the background, some sort of non volatile asset acquisition won't go amiss either.
Or, find a time travelling machine, head back to the 60s and do poppy's strategy. But as you're hinting at, a strategy of a retail savings account, is not going to shift the needle much for you - unless you're able to stash a significant amount of surplus income (which would still be better used elsewhere).
Bank term deposits simply don't stack up for longer-term investors - especially those on a higher (marginal) income tax rate.
Capital appreciation on property, together with (growth in) market rentals, far out-weigh the post-tax return from term deposits - over time. Plus, property delivers a whole range of intangible (non-financial) benefits - such as security, sense of pride, control, stability, social status, avoiding landlords, right to make improvements, right to keep a pet, right to smoke indoors etc, etc, etc (which are often the key reason cited for house ownership).
We seldom (if ever) come across actual people here who say they regret having bought property - even among those who bought at a market peak. Nonetheless, there are a bunch of misguided people here who wildly imagine that house ownership (either as a home or an investment) is tantamount to doom and gloom. (Ironically, they are often people who would love to own a house.)
Nonetheless, bank term deposits are a good, safe holding-pen for one's money - for instance, as one saves for a house deposit. They won't make you rich - but they can help pave the way to a home of your own.
TTP
All depends on your financial situation and age. As a gen X I'm not really interested in inflation and as the interest is my only income source the tax is 10.5%. I have a skill set that doesn't involve needing to pay anyone else to do anything so the outgoings are minimal and should now be able to go on holiday this year after all the stupid Covid restrictions have been dropped. ASB offered 6.26% and I grabbed it while it lasted.
At recent auctions 9% sold above CV so its possibly good for the people who live next to them, for the other 93% you could possibly paint a less rosy picture. Its easy to use a single example how do you explain the 93% stat? just bad luck?
My suburb is averaging 6% above CV but IMHO only if its a large LSB, smaller ones under CV, lies damn lies and stats.....
The overall sales rate in one of the most active sales periods of a year, and the flood (LOG JAM) of new listings do not point to a market where buyers and sellers agree on value, Compare Aussie where 70%+ are clearing every weekend at auction.
There are a heck of a lot of rental properties being held for cap gains. The formulae has been hold for xx years, meet the outgoings and no more, then flip to a developer.
So what now when the developers have much more choice and less cash?
Let immigration get pumped even more, interest rates get dropped and inflation runs amock?
What a difficult environment to make decisions.
Pass the dart board.
The formula has been buy an old 3-4 bedder, rent it out to a local family for a few years, then when it needs substantial renovation sell the property to a developer, the local family moves out and goes on to the public housing waitlist for a brand new million dollar KO home, while the old house is demolished and 6 tiny low quality townhouses are built to accommodate the new immigrants who have recently arrived, and which are sold to Singaporean investors (which arent really Singaporean, but Chinese with Singaporean connections).
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