Advisers may be in for a busy summer as rent hikes make a mortgage more appealing.
Recent Trade Me Property data shows the cost of renting a typical home in Auckland has now gone above and beyond $500 a week.
Century 21 New Zealand national manager Geoff Barnett says with some interest rates falling below 4.5% and high rent in the Auckland region, it will make more sense for some renters to become buyers.
“With Auckland rents up, but interest rates down and house prices softening, many will discover that servicing a mortgage may be less than paying rent into their landlord’s pocket.
“On top of that, you’re assured of good long-term capital gain given Auckland’s strong forecast population growth,” says Barnett.
Squirrel business development director Andrew Mackay told NZ Adviser high rents will probably prompt renters to seriously consider buying property.
“It will help people sit down and do the numbers,” he says. “Every single person that’s renting should at least sit with their adviser to see how far away they are from buying.”
Mackay says many first home buyers start looking for property well before they even sit down with an adviser or a bank.
“I think the motivation of it is almost a little bit of ‘I’ve got to get in (to the market),” says Mackay. “If you plan long-term - say you pay $1 million for a house today and then in 6 months the market wobbles and your house is actually worth $800 million –you didn’t buy it to make money today; you bought it to get into the market and when you push it over a 10 year plan, it is going to be insignificant.”
He says Squirrel will be running education seminars next year for clients so they will have the knowledge to get more out of their money.
“There are a lot of people, especially older people, who tend to fix for two years but if you’re a first home buyer, for me personally, I would be going as low and long as possible. If you signed up as a tenant and you were told ‘we’re not going to put the rent up for 5 years,’ that’s a pretty good deal but people don’t think like that about their mortgage.”
Barnett and Mackay are both expecting a busy summer ahead but Mackay expects it to be a buyers market.
“I don’t think prices will keep going up like they have been because at the end of the day they can’t be sustained by income. I think we will see a flurry of activity but I don’t think we’re going to see an increase in house prices.”
“We’re seeing more young couples and single people in particular coming into the Auckland housing market again which we haven’t seen for a while,” says Barnett.
“Admittedly, some are having to leave their more central rentals to buy further out. However for many that makes a lot of financial sense as it gets them on the property ladder.”
Century 21 New Zealand national manager Geoff Barnett says with some interest rates falling below 4.5% and high rent in the Auckland region, it will make more sense for some renters to become buyers.
“With Auckland rents up, but interest rates down and house prices softening, many will discover that servicing a mortgage may be less than paying rent into their landlord’s pocket.
“On top of that, you’re assured of good long-term capital gain given Auckland’s strong forecast population growth,” says Barnett.
Squirrel business development director Andrew Mackay told NZ Adviser high rents will probably prompt renters to seriously consider buying property.
“It will help people sit down and do the numbers,” he says. “Every single person that’s renting should at least sit with their adviser to see how far away they are from buying.”
Mackay says many first home buyers start looking for property well before they even sit down with an adviser or a bank.
“I think the motivation of it is almost a little bit of ‘I’ve got to get in (to the market),” says Mackay. “If you plan long-term - say you pay $1 million for a house today and then in 6 months the market wobbles and your house is actually worth $800 million –you didn’t buy it to make money today; you bought it to get into the market and when you push it over a 10 year plan, it is going to be insignificant.”
He says Squirrel will be running education seminars next year for clients so they will have the knowledge to get more out of their money.
“There are a lot of people, especially older people, who tend to fix for two years but if you’re a first home buyer, for me personally, I would be going as low and long as possible. If you signed up as a tenant and you were told ‘we’re not going to put the rent up for 5 years,’ that’s a pretty good deal but people don’t think like that about their mortgage.”
Barnett and Mackay are both expecting a busy summer ahead but Mackay expects it to be a buyers market.
“I don’t think prices will keep going up like they have been because at the end of the day they can’t be sustained by income. I think we will see a flurry of activity but I don’t think we’re going to see an increase in house prices.”
“We’re seeing more young couples and single people in particular coming into the Auckland housing market again which we haven’t seen for a while,” says Barnett.
“Admittedly, some are having to leave their more central rentals to buy further out. However for many that makes a lot of financial sense as it gets them on the property ladder.”
