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

Most Read

SBS FirstHome Combo 4.29
Unity First Home Buyer special 4.29
Co-operative Bank - First Home Special 4.85
China Construction Bank 4.85
ICBC 4.85
TSB Special 4.89
Kiwibank Special 4.89
ASB Bank 4.89
Westpac Special 4.89
BNZ - Std 4.89
AIA - Go Home Loans 4.89
Nelson Building Society 4.93
ICBC 4.95
SBS Bank Special 4.95
China Construction Bank 4.95
Wairarapa Building Society 4.95
TSB Special 4.95
ANZ Special 4.95
ASB Bank 4.95
Kainga Ora 4.95
Westpac Special 4.95
AIA - Go Home Loans 4.95
SBS Bank Special 5.39
Westpac Special 5.39
ICBC 5.39
Co-operative Bank - Owner Occ 5.59
BNZ - Std 5.59
BNZ - Classic 5.59
AIA - Go Home Loans 5.59
ASB Bank 5.59
Kainga Ora 5.69
Kiwibank Special 5.79
ANZ 5.79
SBS Construction lending for FHB 3.94
AIA - Back My Build 4.44
CFML 321 Loans 4.99
Co-operative Bank - Owner Occ 5.95
Co-operative Bank - Standard 5.95
Heartland Bank - Online 5.99
Pepper Money Prime 6.29
Kiwibank - Offset 6.35
Kiwibank 6.35
TSB Special 6.39
ASB Bank 6.44

More Stories

Four decades of 6-7% yearly house price growth ending

Friday, March 21st 2025

Four decades of 6-7% yearly house price growth ending

New Zealander’s reliance on property capital gains in the mid-single digits is at an end.

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

Friday, January 31st 2025

[TMM Podcast] Yelsa serves up “marine reserve” of property buyers

It’s been years in the making and former real estate agent Mike Harvey is now coming to market with his platform matching buyers and sellers, an offering he says will be a gamechanger for the industry.

Leaving last year's stumbling housing market behind

Friday, January 17th 2025

Leaving last year's stumbling housing market behind

As interest rates ease and job losses climb, New Zealand’s housing market faces a mixed year of modest growth, with conflicting forces shaping the outlook for homebuyers and investors.

Don’t bet on house prices rising faster than incomes

Wednesday, January 15th 2025

Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.