New Zealand’s property market gained further momentum last month on the bank of low interest rates, ANZ says.
Its latest Property Focus report shows increasing numbers of factors pushing prices up, including migration and the availability of mortgage funding.
It points out that household debt levels are high but says low interest rates are mitigating the effects of that for the time being. “Mortgage payments as a share of income are now around 40% as opposed to the late 2007 peak of 57%."
House prices nationwide were 7% up on the same time last year, but mortgage servicing as a percentage of disposable income is at a 10-year low.
Of the report’s ten indicators for the direction of house prices, just one is pointing remotely down – globalisation, where New Zealand homes are expensive compared to other markets.
Migration figures are increasing, the supply/demand balance is still out of kilter, although it is improving, and banks are still willing to lend, although the report said the pace of lending could soon slow.
The report said mortgage rates had reached their low point in the cycle. “It makes sense for those borrowers looking for more certainty to start considering specials in longer-term fixed mortgage rates ahead of a gradual normalisation in 2014.”