News

Price wars to support property market: CoreLogic

Mortgage rate wars will underpin property market growth following a "sluggish" start to the year, according to research firm CoreLogic.

Wednesday, April 24th 2019

In its quarterly review of the market, CoreLogic says aggressive price cuts from the banks will help drive the market after a slow first three months of 2019. 

2019 has been characterised by price wars between the major banks and their smaller rivals, with two and three year rates falling below 4%. CoreLogic says the activity will  "support house prices" in the year to come, as volumes in the opening three months remained comparable to the same period in 2018. It expects volumes to remain flat over the course of the year, with stronger growth outside of Auckland.

CoreLogic's Kelvin Davidson told TMM Online rate wars demonstrated banks were "trying to steal customers" amid low turnover rates and slow sales volumes. "There is a competitive banking environment. I don't think sales volumes will surge away in the next year or two, so those sorts of conditions suggest competition will remain tight."

Davidson expects the Reserve Bank's new capital rules will cause rates to rise in the long-term, but says short term rates will stay low for "good borrowers". "If you can pass servicing tests conditions will remain good for borrowers."

CoreLogic said tough servicing tests at theoretical levels of 7%-8% were good for the market, and would leave borrowers "well-prepared" for eventual rate increases. Davidson added: "Tough tests are needed as debt levels are higher than ever before in the economy. A 1% increase would have a much bigger effect than it would 20 years ago, and the market is more sensitive than it was in the past."

Overall, CoreLogic says Q1 delivered an "almost identical" property market performance to Q1 2018, with growing first home buyer volumes a notable change. The company expects investors to remain a strong part of the market despite continued restrictions on investor activity. "Anecdotally, some investors are reported to be exiting the sector and selling to FHBs. But there’ll also be other investors simply snapping up sales to boost their own portfolios, so it’s hard to envisage that the stock of available rental property is about to change much anytime soon."

 

Comments

No comments yet

Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

More Stories

Support for regulation

Monday, March 18th 2024

Support for regulation

REINZ has emphasised the need for property management regulation to Parliament’s Social Services and Community Committee.

A better investment market

Thursday, March 14th 2024

A better investment market

“Reinstatement of interest deductibility starting from the new tax year on 1 April brings property investors back in line with every other business in the country, where interest costs are a legitimate deductible expense," Tim Horsbrugh, New Zealand Property Investors Federation (NZPIF) executive committee member says.

[OPINION] Recessionary times

Thursday, March 14th 2024

[OPINION] Recessionary times

It is not the best out there for many businesses and property sector people. Sales are down across the board, our clients’ confidence is falling, and there is a lot of uncertainty.

Interest rate expectations: It’s not over yet

Thursday, March 07th 2024

Interest rate expectations: It’s not over yet

Most Kiwis think interest rate increases have peaked.