Market Update July
SM Property

July 18, 2023

The NZ property market remains ever-changing, influenced by various factors such as buyer preferences, lending conditions, and market trends. Let’s delve into the latest survey results highlighting key themes and trends shaping the market from Tony Alexander. From first home buyers to the lending environment and interest rated, we explore the current property market landscape.

First Home Buyers

First home buyers continue to play a significant role in the mortgage market, displaying continued activity and interest in property ownership. However, many investors are adopting a cautious approach, waiting for the outcome of the upcoming election before entering the market. The recent rise in bank mortgage rates has frustrated potential buyers, as they observe signs of a turning market but remain unable to make purchases due to high stress test mortgage rates. These factors contribute to a complex environment where buyer sentiment is influenced by a range of external factors.

Despite a decline in mortgage advisers reporting an increase in first home buyers, there’s still a strong presence in the market. The decline is more likely a temporary adjustment rather than a sign of a declining trend. Bank lending to first home buyers has shown some leniency in terms of clients’ expenses. The recent lifting of LVR restrictions has been received positively, providing more opportunities for first home buyers.


The number of investors has declined, indicating a cautious stance amid uncertainty surrounding the upcoming election and interest deductibility. Many investors have become more selective, considering only properties with strong income potential and low debt. The market has experienced a decrease in investor activity, with fewer inquiries regarding property purchases. As the election outcome and policy changes unfold, investors are expected to regain confidence and re-engage in the market.

Lending Options and Perceptions

Mortgage advisers perceive that banks are still open to advancing funds, albeit with a slight decline in lending willingness compared to previous months. High stress test rates remain a significant challenge, leading to lengthy expense assessments. However, banks have responded to the market conditions by relaxing lending rules. This in turn help protect their market share in an environment of low sales. The recent changes in LVR rules have further facilitated lending by allowing additional borrowing with less than a 20% deposit.

Preference for Fixed Interest Rates

Mortgage advisers have noted a shift in preferences for interest rate fixated periods, towards two-year rates compared to one-year. This trend may be attributed to slightly lower interest rates for two-year lending and the increasing significance of high interest rates as a hindrance for borrowers.

The NZ property market is characterized by the active participation of first home buyers and cautious behavior among investors. Lending conditions remain favorable, with banks maintaining a willingness to advance funds. Wanting to chat more about whether now is the right time for you to buy? Chat with the SM Property team today.

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