OCR Rise Will Not Deter First-home Buyers

“Interest rates are still incredibly low and will be for some time. For as long as servicing a mortgage remains comparable, or even cheaper than paying rent, prospective buyers will not be put off. In fact, this latest move will probably only motivate more first-home buyers,” says Tim Kearins, Owner of Century 21 New Zealand.

His comments follow the Reserve Bank lifting the Official Cash Rate by 25 basis-points to 0.50% - the first OCR hike by the central bank in over seven years.

“We’re not expecting to see a sudden and significant change in rates, as banks have already been subtly raising mortgage rates in anticipation of future hikes. It will take a lot more than a tweak of the OCR to put off those desperate to get into the housing market,” says Mr Kearins.

“The demand pressure on our housing stock is not going anywhere fast, particularly when you consider 165,000 migrants are now eligible for fast-tracked resident visas. While’s it’s positive news, it will nonetheless start unleashing many new home buyers into the domestic market,” he says.

The Century 21 leader says on top of the ongoing housing shortage, record high rents are motivating first-home buyers to purchase.

In fact, in August, a UK Cost of Rent Index Study placed New Zealand as the 13th least-affordable country to rent a three-bedroom house in the world. At the same time, New Zealand was 10th on the list of countries spending the highest percent of monthly outgoings on rent.

“If it costs you $650 a week to rent, but you can buy the same home at $600 a week, people will buy. If young Kiwis can raise a deposit, buying the likes of a townhouse gets them on the property ladder which will only help secure their future.

“As long as the option to secure a five-year interest rate at under four or five percent remains, this latest Reserve Bank hike will not deter Kiwis from purchasing property, That’s because New Zealanders understand, over time, house prices always inflate and that’s much more rewarding than paying a landlord,” says Tim Kearins.

www.century21.co.nz

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