Dunedin Market Report - December 2023

The stats are out for December 2023 and it’s interesting to observe some changes post-election. The median value rose from $597,000 the month previous to $613,000. The median days to sell dropped slightly from 34 to 31, and there were 167 sales for the month compared to 133 for the same month in 2022. These results may be a reflection of what agents are seeing at the coal face, and that is a rise in positivity.

There continues to be good activity from first-home buyers which makes sense as they are still not competing with large numbers of investor buyers. This must just be a matter of time surely, as the new government has flagged April 1st this year to re-introduce some tax deductibility from interest rates, albeit at 60% to begin with and slowly heading back to 100% tax deductibility by 2026. The other significant change is the return to a 2-year Brightline period for all properties rather than the current 5 years for new builds and 10 years for existing homes.

A few investors have popped out of the woodwork recently and chosen to buy now ahead of those changes while prices remain stable. But mortgage brokers report large numbers doing their figures and getting ready to buy. If we see any further increase in median values they may choose to move sooner rather than later so we urge first-home buyers to get into the market now. It remains a great time to upgrade your existing home.

It’s a bit early to say whether this increase is the start of a trend, but there’s no doubt in our minds that the bottom of the market has come and gone. Prices may remain stable for some time as Dunedin historically has done in the past, but we look forward to reporting in the next few months.

Dunedin Market Report May 2023

Another month with the median value at $570,000, making it 3 months in a row at this level. Increased buyer activity has been matched by increased choice of property, however, listing volumes are starting to decline which is often the way during Winter. There was a total of 127 sales in April compared with 125 the year previous. Median days on the market was 44, similar to last month and considerably shorter than February which was 62 days.

All of this points to renewed confidence in the Dunedin market, and a belief that we may have seen the worst of the financial cycle and mortgage rate rises. Recent news such as lower long-term mortgage rates, an easing in the LVR (lending to value ratio), and adjusted rules around assessing a borrower’s expenditure have helped bolster activity.

However, property still remains very price sensitive, and presentation matched with the right selling strategy, or correct list price is key to getting sold.

There is increased pressure on rental property supply and rents are rising as a result. Investors are starting to take interest again, so right now there is a window of opportunity for first-home buyers to act with less competition. For anyone looking to sell and upgrade the relative price difference is likely the lowest it will be, so we urge you to act now.

Homes that present well in the Winter months with good sunshine hours will attract interest, and those sellers will be faced with less competition from other listings.

Changes to Kainga Ora First Home Loan Scheme

During Budget 2022 the Government announced some changes to the Kainga Ora First Home Loan Scheme (you may know this as the 5% deposit loan scheme) effective 1 June 2022. Why is this important? Because right now every single bank (with the exception of Westpac) has tough restrictions on lending to anyone without a 20% deposit, meaning many first home buyers in particular are locked out of the property market.

Summary of the changes.

Increases to the house cap for the First Home Loan Grant: The First Home Loan Grant is effectively free money the Government will give first home loan buyers (joint borrowers buying a new house, and in some cases buying land, can get up to $20k and up to $10k for an existing property. Here are the price caps for our Region:

Removal of the First Home Loan house price caps altogether: Some banks (such as Westpac, SBS, CO-OP etc) have partnered with Kainga Ora to offer low deposit loans (think loans for as low as 5% deposit here). Previously you only qualified for these loans if you met a regional house cap (eg $425k in Dunedin and $600k in Queenstown). This effectively meant that unless you were purchasing a dog kennel you didn’t qualify for this loan product. Well, the good news is that these caps are no more! In simple terms if you can afford to service it then you can borrow it…

With house price caps removed the market for first time buyers suddenly got a whole lot more realistic (and I have 4 clients who couldn’t get a loan two weeks ago who can now buy a house).

Here’s what you need to know:

• Clients only need a minimum 5% deposit

• Have an income of less than $95,000 for an individual borrower or $150,000 for an individual borrower with dependents

• Have an income of less than $150,000 for two or more borrowers

• Are a first home buyer or second-chance buyer

• Are a New Zealand Citizen, Permanent Resident or a Resident Visa holder who is 'ordinarily resident in New Zealand

• Have been in the same employment for 12 months or the same industry for two years.

I’ve tried to keep a slightly complicated process as simple as possible, so if you have any more questions and would like to know what these changes mean for you call into Harcourts and have a chat with Ken Cochrane from Mortgage Express. You may be in a position to shoot a bit higher for your next home.