Although interest rates seem to have stabilised with the Reserve Bank expected to maintain the official cash rate at 5.5%, the fallout in the housing market is far from over.
House values have fallen approximately 15%, and many recent buyers are facing not just these higher rates but also reduced property values, according to a report in state media.
Recent data from Corelogic indicates that over 7% of homes sold in the first quarter of this year fetched prices lower than their purchase prices, with a median loss of $50,000. This downturn is attributed to buyers who had shorter hold periods in a market that no longer supports quick capital gains due to flatter growth in recent years.
Despite some homeowners adjusting to increased mortgage rates, challenges remain. Not all have adjusted to the potential 7% rate, and with looming job losses, financial pressures are expected to intensify. Although mortgagee sale rates are currently low, there is an uptick in stress within the housing market, as evidenced by a 23% increase since last July in the number of houses listed for sale, hitting the highest level since 2015. Particularly affected regions include Wellington and Wairarapa, where fears of public sector job cuts exacerbate the situation, and other areas with stretched affordability metrics.
The market is showing signs of strain, with an increasing trend in non-performing and overdue mortgage lending – the highest since 2013. This strain is partly due to households depleting their reserves under the burden of higher rates, which now often exceed 6.5%. Property investors and first-time buyers are adjusting their strategies, with a notable increase in transactions by movers and a drop in market share for first-home buyers and investors. The current dynamics suggest a cautious and slow recovery path for the housing market, with some potential for further distress as adjustments to new economic realities continue.
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If people would comprehend how money creation works, they would know where we are heading.
Fractional reserve banking, compound interest and Central Banks which are owned by ONE cabal, have characterised finance and economy for such a long time, that it is difgficult for most people understand that imaginary ‘monetary’ plane, totally disconnected from real wealth creation.
The transition from that imaginary plane to the real one will be a sight to behold and will be astounding to even the most studied ‘experts’.
Then there’s me. I bought a ratty/run down property for cheap. Spent weekends painting, cleaning, repairing. I now have a comfortable home with no mortgage.
Can’t escape taxes, utilities, insurance 😭 but have a roof over my head.