Is Now A Good Time To Buy Your First Home?

Real estate agent gives the key to the house buyer in the office

18 Nov Is Now A Good Time To Buy Your First Home?

In many parts of New Zealand, house prices have been steadily dropping and much of the post-COVID-19 heat has left the market, presenting first home buyers with greater opportunities to negotiate and house prices that are more realistic and reflective of the current market. For some first home buyers, now may be the ideal time to buy a first home.

Current housing market conditions

Following COVID-19 lockdowns in 2020, the property market in New Zealand boomed and property prices skyrocketed. Home ownership was pushed out of reach for many first home buyers. However, since the Reserve Bank of New Zealand (RBNZ) began raising the official cash rate (OCR), in an effort to gain control over inflation, mortgage interest rates have been driven upwards and the market has noticeably slowed.

At the same time, activity from first home buyers has started increasing, and CoreLogic NZ’s latest Buyer Classification data shows first home buyers made up 25 percent of all property sales in August 2022, the highest activity seen amongst first home buyers since December 2021. Further easing of the CCCFA rules, which had an unintended consequence of cutting out thousands of eligible home buyers, along with changes to the First Home Grant and First Home Loan could have a positive impact on first home buyers, and spur more into making a decision to get into the market at this time.

While loan to value restrictions (LVR) continue to hamper some first home buyers with low deposits, and others are simply holding back from entering the market with a hope that house prices will drop even further, some first home buyers are pushing ahead to buy a first home and avoid missing out on their ideal home.

Buy now or wait?

Whether or not now is a good time to buy a first home depends on your circumstances. If you’re buying a first home to live in, raise a family in, or settle down in, now might be the best time to buy. Your financial situation and lifestyle are other important factors in your decision. High mortgage rates are an obvious concern and it’s essential you review your financial situation to ensure you can afford your mortgage while managing your other goals.

Some first home buyers are in the best position to buy a home now. With less competition, there’s more time to negotiate on price and potentially pick up a property at a more realistic price point. Others may prefer to wait and see what the market will do.

The property market is so variable, and any number of changes, including interest rates, legislative or seasonal changes, can have a significant impact on house prices. It’s impossible to predict when the downward cycle will turn, and waiting for the market to change could mean losing out on your ideal home. The fact is, the best time to buy a first home is when you can.

While you’re waiting…

If you’re not yet ready to buy a first home, here are some things to take care of while you wait:

  1. Understand your credit score and avoid the things that can harm your credit score and potentially impact your ability to get a loan.
  2. Tidy up your spending so you’re ready to present a clean set of bank statements to the lender. If you’re struggling with multiple debts, consider a debt consolidation loan to help clear your high interest debts and improve your credit score at the same time.
  3. Put more money away into your savings to grow your deposit.
  4. Get mortgage pre-approval so you can move quickly when the perfect home turns up.

Talk to the professionals

As always, it pays to talk to someone who understands the current market and the challenges that first home buyers face. Someone who has a finance solution to fit each unique situation. At Max Mortgages, our Mortgage Advisers work hard to find the right solution to fit each first home buyer’s circumstances. But we’re not just all about securing finance: from guidance around saving for a deposit, to preparing for pre-approval, right through to structuring the home loan, our team of Mortgage Advisers helps first home buyers get into their own homes.

Contact Max Mortgages today to find out how we can help you.

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