SO WHAT FACTORS CONTRIBUTE TO MARKET SENTIMENT ?
Interest rates continue to underpin purchasers buying power . The OCR currently sits at 1.50 per cent , with the next monetary policy review announcement set for 25 May 2022 .
• Interest rates - are a driver of home affordability . Continued rate rises over the next 12 to 18 months are expected . With predictions the 1 year discounted fixed rate will be close to 5 per cent by December 2022 . This is a small but meaningful interest rate jump , particularly for those coming off low 2 per cent interest rates .
• Lending environment - a significant market headwind is the changing lending environment . Not only are rates on the rise , but credit availability has also gotten tougher . Loan-to-value ratios have returned , new Credit Contracts and Consumer Finance Act rules - which make accessing lending harder - are in place , and the Reserve Bank is consulting on debt-to-income ratios .
• Affordability - Eight out of 19 regions hit all-time asking price highs last month according to realeaste . co . nz .
• Housing supply - Year-on-year , total stock levels were up 70.8 per cent nationally in all regions providing more choice for buyers .
• Net migration - the reopening of borders for New Zealand is likely to allow a resumption in higher levels of migrant arrivals with MIQ virtually obsolete . At the same time , a build-up of New Zealand talent could be looking to move offshore to pursue employment opportunities during 2022 and 2023 , having waited patiently for two years to do so .
This chart compares the number of loan pre-approvals submitted via Loan Market brokers over the past three years .
# Loan Pre-approvals / 28 days
1,600 1,400 1,200 1,000 800 600 400 200
Dec Jan Feb Mar Apr May Jun Jul 2019-20 2020-21 2021-22
Source : Ray White Online Analytics