CategoriesMarket Updates

Bayleys January Market Round-Up

A summary of some of the recent developments shaping New Zealand’s housing market over the last month.

Winding down with the most buoyant December residential market in three years according to data from the Real Estate Institute of New Zealand (REINZ), forecasters have kicked off 2020 by upping the ante on expectations for the first year of the new decade.

Finding that a combination of historically low interest rates, consistent net migration, rising consumer confidence and a strong jobs market are contributing to rising value growth, commentators such as independent economist Tony Alexander and the ANZ Bank now anticipate housing inflation in the realm of eight percent year-on-year by June 2020.

This change in tune is largely owing to a greater-than-expected rebound in housing market activity which after a cooler performance in 2017 and 2018, has risen six percent in the six months between July and December 2019 alone.

While the Reserve Bank of New Zealand’s monetary policy has proven effective, stimulating activity across our national housing market, there are still financial stability risks on the radar, most notably the return of speculative activity (investors) and affordability in terms of household debt-to-income ratios.

A date has recently been set for what could be a potential disrupter this year, with New Zealand’s general election now set to take place on 19 September 2020.

As experienced in previous years, a degree of market disruption is expected on either side of this date in September as Kiwis digest policy, promises and the outcome.

In-depth reports:

• The latest latest Monthly Property Report from the Real Estate Institute of New Zealand (REINZ) reveals that New Zealand rounded off 2019 with the highest number of residential properties sold in December for the last three years, while also recording price rises in 15 out of 16 regions.

• In the 16th annual edition of the Demographia International Housing Affordability Survey has found that New Zealand’s housing affordability is getting worse, with prices now seven times the median household income.

• In it’s latest Property Focus report ANZ has become the first of New Zealand’s banks to revise it’s property forecast and is now predicting eight percent growth by mid-year thanks a variety of factors including functional monetary policy and a buoyant residential market.

Topical articles:

• The New Zealand Herald’s property website OneRoof shares picks for New Zealand’s top 10 suburbs to watch in 2020 , echoing Bayleys’ sentiments that improving infrastructure is a key indicator of growing housing markets.

• Finance Minister Grant Robertson is set to announce a huge infrastructure package worth $12 billion, making it the biggest in New Zealand’s history. Roading, rail and hospitals across the country are the major beneficiaries.

• Effects of the deadly coronavirus which has infected more than 4,500 people worldwide to date are expected to hit New Zealand’s economy, permeating food exports, imports and tourism, experts warn.

• One of New Zealand’s major banks has dropped its investor lending rates to the same level as owner-occupied rates. The move comes in answer to a competitive loan market which is experiencing the resurgence of investors.

• Identifying family stability and the desire to net long-term capital gain as contributing factors, the New Zealand Herald’s property website OneRoof shares some of the country’s most tightly-held suburbs, according to data from the last 20- years.


Contact us today


Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

How to leverage your equity like an investor

Bayleys property reporter Katharina Charles investigates the equity investment process and outlines how the concept could work for you.

Between deposits, interest rates and changing legislation, property investment can seem a daunting and complicated endeavour, however, simple calculations and good advice can open new doors for budding investors.

Viewed as a relatively straight-forward investment option when compared to managed funds, bonds and shares, a growing number of Kiwis are looking to residential property as a vehicle for wealth-creation.

Purchasing your first residential property is an exciting, nerve-wracking and strenuous process, least not due to the added pressure of regular mortgage repayments.

Where loan management can seem a tricky enough task, the thought of increasing your liability by purchasing an investment property may appear down-right impossible.

However, more Kiwi homeowners are finding they may be able to leverage the equity in an existing property to fund the purchase of a second – just as seasoned property investors do.

What is equity?

Quite simply, equity in a property is the difference between the home’s value and the amount you owe on your mortgage.

The greater amount paid off your principal mortgage, the more equity you create.

The concept of leveraging equity to fund the purchase of additional property requires that a bank or lending institution allows access to the capital or equity in your home loan for use as a deposit against the next property purchase.

For example, if you purchased a home in December 2014 for the Auckland average (at the time) of $685,000; under current loan-to-value rules you would likely have a mortgage of $548,000 – which is 80 percent of the initial purchase price.

Assuming that your $548,000 mortgage on the property is on a 30-year term with a static interest rate of five percent, and you have been making the minimum payment each month, after five years you will have paid $137,000 in interest along with at least $39,000 in principal off the loan.

In line with Auckland’s average capital gain, by December 2019 your home will have increased $205,000 in value to $890,000 and you will have a remaining mortgage of $509,000.

Your initial deposit of $137,000 has now grown to $381,000 worth of equity.

Making a move

In the example above, five years have passed, in that time equity has built up and the home has improved in value thanks to capital appreciation.

It is feasible then that you may be able to increase the size of your mortgage to access the equity.

When looking to leverage equity the most popular pathway for property investors is to release capital from one property by refinancing the loan and using the cash to fund the deposit on the second property.

This allows borrowers to recycle the deposit rather than dip into savings for new property purchases.

For your existing property the minimum 20 percent equity required by loan-to-value rules for owner occupied properties applies; meaning that if using the example above $137,000 must remain as equity leaving $244,000 to be used as a deposit for a new purchase.

For borrowers looking to purchase a rental property which is subject to a minimum deposit of 30 percent under loan-to-value rules, you may recycle your $244,000 equity to use as a deposit on a new property purchase, worth a maximum of $813,333.

It is important to note that when assessing suitability for further debt, lenders will look at your current financial situation including debts, equity, savings and your ability to service the loans as well as the potential net return, before making a decision regarding approval.

The right advice

The very nature of leveraging an asset leans on the assumption that the ultimate profit will be greater than the interest payable, which to some may seem intimidating given that the future is unknown.

While current forecasts pick housing inflation to continue on an upward trajectory, an important part of investment is always to seek the right advice.

Consultation with a mortgage broker, accountant and legal professional can ensure you build a financial structure which is best suited to your goals and individual situation, resulting in the confidence to leverage your equity responsibly.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700


CategoriesMarket Updates

Southern Hospitality

Now generating some $39.1 billion for the domestic economy, the growth, development and maintenance of our travel and tourism industry influences thousands of Kiwi living choices.

Billed as one of the world’s fastest growing industries and a major contributor to New Zealand’s economic prosperity, Auckland’s travel and tourism industry has become a major catalyst for growth and development across the City of Sails.

An $8.3 billion business in Auckland alone, both domestic and international tourism to the city has experienced extraordinary growth in the last decade.

With estimates picking up to four million international tourist arrivals in Auckland by 2023, new opportunities for employment, infrastructure and development exist which are influencing the emergence of new suburbs and areas set to benefit from intensification.


Responsible for one in five job opportunities across the world, the growing tourism market brings with it a swathe of new career opportunities which have a significant bearing on our living choices.

“The tourism sector is becoming cornerstone to the economy – creating jobs, driving exports and generating prosperity for our cities and regions,” says Auckland Tourism, Events and Economic Development (ATEED).

However, as visitation to Aotearoa grows, tourism-related employment has fluctuated, prompting industry-bodies to work together in order to attract the new talent necessary to keep up with demand.

One such initiative is the Government-backed nation-wide programme ‘Go with Tourism’, aimed at attracting workers of all ages and skillsets to careers in the tourism sector.

“The digital ‘Go with Tourism’ platform connects employees with businesses and organisations currently offering employment opportunities and committed to living wage remuneration.”

By directing focus towards tourism career opportunities, certain locations such as Wynyard Quarter in downtown Auckland, which is positioned to serve as an important backdrop to the 36th Americas Cup in 2021, could emerge as high-employment areas, attracting a new wave of residents wanting a home in close proximity to work.

With upscale apartment projects 132 Halsey and 30 Madden set to add more than 300 residential units to the area as well as attracting significant food, beverage and retail operators, Wynyard Quarter is reaping the rewards of visitation.

Further commercial and office developments such as the recently announced $140 million Orams Marine Village are predicted to draw a further 25,000 workers to the area by 2030, making it one of the country’s most significant precincts for tourists, residents and employees alike.


Billed as Auckland’s most vulnerable area in ATEED’s ‘Destination AKL 2025’ report, roading and transport infrastructure has been a category identified as requiring significant investment from both the private and public sectors.

“Tourism operators, residents and visitors surveyed in this report all agreed that the best strategy for making the region a more attractive tourist destination is to improve our public transport.”

Initiatives such as the $60 million bus and rail interchange in the south Auckland suburb of Puhinui and the Botany Rapid Transit project are set to significantly improve airport connectivity to the city’s southern and eastern suburbs. While the City Rail Link and light rail projects are transforming transport links from Auckland’s west through to the city centre.

“These transport projects help to spread the flow of visitors throughout the region by improving connectivity in and around the city, with effective public transport links.”

Spin-off benefits extend to further employment; boosting trade, skills and the potential to attract international investment by way of capital to fund infrastructure projects.

Two areas set to benefit from significant planned infrastructure are the south Auckland suburbs of Manukau and Wiri.

“Given our reliance on air travel to transport international visitors, the Manukau and Wiri town centres have become important hubs which guests will utilise for transport, accommodation and entertainment given their close proximity to Auckland International Airport.”

Involving major investment by the Auckland Council and local Government, the Transform Manukau project will see more than 600 hectares of land developed for both residential and commercial use including healthcare, schooling, education and transport extending to rail, cycle and bus ways.

“Road and rail projects are necessary to offer a connected tourist experience, but they also demonstrate a multiplier effect, making areas like Manukau and Wiri more accessible for a new wave of residents while boosting the local economy through job creation.”


In its survey findings from the ‘Destination AKL 2025’ report, ATEED sought information from Auckland’s residents and its visitors which highlighted a fundamental difference in the way each group spends their time.

While residents preferred to visit sites out of the city centre like Waiheke Island (19 percent) and the Waitakere Ranges (11 percent); international visitors cited indoor sites such as the Sky Tower (14 percent) and Shopping Malls (12 percent) as their location of choice.

Despite their differences, both groups gave ‘eating out’ a place in their top five favourite experiences.

“Thanks to a diverse ethnic population, Auckland benefits from a spectrum of restaurant and dining experiences which continues to attract attention on the global stage and as an off-shoot of a vibrant restaurant landscape, visitors and residents embrace our many cultural festivals including the Chinese Lantern Festival, Pasifika Festival and Diwali.”

Exceeding $1 billion in consumer spending this year alone, Auckland’s hospitality sector has paved the way for the creation of neighbourhood dining precincts like those seen in Orakei, Kingsland and Botany Downs.

The off-shoot of which is a growing desire to live and/or create businesses in these communities which boast, quality housing, amenities and a beating heart, just minutes from the front door.

“Auckland’s diversity is a key strength which in turn attracts a diverse range of visitors, encouraging the development of broader food and retail offerings as well as increasing economic opportunities.”

These economic opportunities extend to the modern phenomenon known as ‘the sharing economy’.

Encompassing ride sharing, food-sharing and home-sharing applications like Ola, Uber Eats and Airbnb, more Kiwis can get a slice of the dual income pie, thanks to an increase in demand which is spurred in-part by the growing number of visitors to our city.

Welcoming some 2.7 billion international visitors to our city in the year to May 2019, Auckland’s tourism sector has experienced incredible expansion over the last decade, with plenty more to come.

This expansion is poised to develop hand-in-hand with our residential property market, which is well-positioned to deliver positive effects courtesy of increasing employment opportunities, rewarding developments and infrastructure which add capital value and growing liveability encouraged by economic opportunities and a diverse cultural backdrop.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

The BIG Picture

Involving so much more than just snap-decision making, choosing a home requires a big-picture approach to economic policy.

Bayleys property reporter Katharina Charles speaks to economist Cameron Bagrie to find out what macro-economic trends are set to impact buyer behaviour this year.

“There’s a lot going on in the housing arena,” Cameron Bagrie, chief economist and managing director of Bagrie Economics says.

Sandwiched between new legislation, booming migration, monetary policy aimed at stimulating the domestic economy, loan-to-value ratio restrictions remaining in place, and labour constraints which have added to the supply versus demand debacle, residential property buyers often find themselves gazing into the tea leaves of economic policy for answers.

In this article, we examine some topical issues which will give buyers pause for thought as to where, when and how they choose to make their next property-motivated move.


Despite migration numbers having fallen from record high levels, New Zealand – and especially Auckland continues to experience massive population growth with some 54,623 migrants arriving in the country during the 12-months to September 2019.

“The demand for housing persists and while supply is coming online as we build more houses, the fact remains we have a shortage of housing which is an indication that prices should keep moving up,” Bagrie says.

However, it’s never really that clear cut, he adds.

Affordability eventually puts a cap in place, as demonstrated in Auckland which has experienced a flattening market over recent times.

Conversely, looking at the last 12 months of sales data, regional New Zealand has outperformed larger city centres in terms of sale volumes and year-on-year house price growth.

Residential values for the year to October 2019 grew 8.2 percent outside Auckland, while within Auckland the data showed a decline of 0.7 percent, according to the Real Estate Institute of New Zealand’s (REINZ) Housing Price Index (HPI).

“Cheaper houses and regions are playing catchup. Auckland’s population used to grow faster than the country as a whole. Now Auckland is growing in line with the national average despite more migrants turning up.”

“Aucklanders are still migrating out into the regions,” Bagrie says.

Auckland’s housing shortage has been exported out to the rest of New Zealand and we are now seeing rents in the regions outpace Auckland as housing shortages bite, he adds.

“Our insatiable thirst for yield has also pushed price-conscious buyers out into the regions where respectable yields can still be found.

“However, the flipside – which is what we were beginning to see at the close of 2019, is that as prices in the regions track upward, yields track downward – and you start to see buyer resistance at certain price points.

“It’s no coincidence that the strongest performing regions in New Zealand over the past year have been the cheaper ones. This is the affordability dynamic at work,” Bagrie says.

Historic attitudes have billed Auckland as the city with the housing shortage. It’s now across most of the country as building activity struggles to keep pace with demand, he adds.


“Interest rates are low, and set to remain low,” says Bagrie, echoing sentiments from the Reserve Bank of New Zealand’s (RBNZ).

“Low interest rates mean borrowers find it easier to service a loan and move the dial in favour of owning versus renting.”

“Low interest rates are also driving an insatiable chase for yield by investors, across both the residential and commercial arenas,” he adds.

“Whether interest rates move up or down by 50 basis points in the next few years is pretty incidental. They are going to be at remarkably low levels”.

Banks also don’t lend based on the current advertised interest rates; these institutions use a higher rate to assess a borrower’s ability to service the loan. Bagrie says these rates are coming down, which makes a big difference on how much an individual can borrow using mortgage calculators.


“Where current and proposed changes to policy and legislation including new obligations on landlords, the foreign buyer ban, ring-fencing tax losses and capital requirements, may have seen some property investors hit the eject button – those rentals are being picked up by hungry first home buyers,” says Bagrie.

However, Bagrie says the tightened rental market puts further putting pressure on rents to rise faster.

Despite this, the fundamental issue of affordability is not being addressed, Bagrie says.

“The more house prices move up, and the Reserve Bank stokes the fire by lowering interest rates, the worse the problem gets.

“Intensification is the way of the future and it is economically imperative that the Government goes down that route, paving the way for cheaper and more efficient building processes,” he says.

Challenged by capacity and skill shortages however, Bagrie acknowledges the need to prioritise goals in order to make an impact, as promising too much, especially as we head toward the General Election, could be counter-productive.

“It’s encouraging to see a stronger focus on infrastructure spending by the Government. We have clear infrastructure deficits and some of those deficits constrain the supply of housing.”

Bagrie says we are making small inroads but it’s a long drawn out process to make housing affordable again.


In its latest Housing Confidence Report, ASB Bank found that net 13 percent of survey respondents now say it’s a good time to buy residential property – which is the highest number in seven years.

“An improved air of confidence across both the economy and our residential market is only good news, as it tells us things are starting to look a little better under the hood,” Bagrie says.

While the RBNZ estimates its increased capital requirements will raise bank lending by 20 basis points, relative to the Official Cash Rate (OCR), Bagrie does not anticipate any extreme movements in interest rates or the OCR for the next 12-months.

“Low interest rates are a global phenomenon and as the RBNZ has stated in its last Monetary Policy Statement (MPS), interest rates are likely to stay low for a long time.”

“This is excellent news for both buyers and sellers who can take encouragement from preferable lending conditions and the opportunity to pay off debt faster than ever before,” Bagrie says.


“The banking sector’s impact on the economy is huge. The sector has come under the spotlight from regulators including the Reserve Bank and the result is that there are more hoops to jump through when you seek a loan,” Bagrie says.

Access to credit has become less free and easy, and outright harder for some sectors.

The Reserve Bank worries about financial stability or areas that could destabilise New Zealand. This includes things like debt levels and exuberance in housing, commercial property and agriculture.

Bagrie explains that the RBNZ really just wants moderation, as moderation reduces the potential for a boom to turn into a bust.

“With the recently announced capital review findings imposing higher capital ratios on New Zealand’s banks, to safeguard against a market downturn, there exists an opportunity for non-bank lenders to enter into the market and the smaller New Zealand owned banks also step up.”

While predicted to direct the focus of big banks on to residential mortgage lending which typically carries less risk than sectors such as agribusiness and property development, Bagrie expects that capital will still find a way to identify new opportunities.

“New operators such as Australian-based MaxCap Group, have recently expanded to the New Zealand market offering funding for property development projects and driving lending competition for development while answering the call for additional availability of credit,” Bagrie says.

In its most recent Credit Conditions Survey, the RBNZ found that 29 percent of bankers felt the willingness to lend to commercial property developers had declined – a sentiment which leaves opportunity for international and other local firms to invest in New Zealand and its development.

According to Bagrie, New Zealanders will also need other lenders to fill the void if housing shortages are not going to intensify past current building levels.

For residential property purchasers, this is important because it speaks to the supply and demand dynamic, and those looking to secure optimal value are well-advised to watch development, investment and planned infrastructure as an indication of future value.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Altogether ready for summer

Synonymous with the beach, backyard cricket and barbeques – this summer Bayleys has discovered there’s a lot more to love if you’re in the residential sales market.

Offering longer daylight hours full of action-packed activities, and balmy summer nights designed for dining alfresco, summer in New Zealand gives a palpable seasonal pick-me-up to Kiwis of all ages.

Warmer weather and the new year also acts as a shot of adrenaline to the already busy residential sales market, which sees would-be sellers, refreshed from holidays, look to take advantage of the ‘new year, new home’ attitude which saw values across the country lift more than three percent last year, according to the Real Estate Institute of New Zealand’s (REINZ) Housing Price Index (HPI) data from January 2019.


While interest rates world-wide sit at record lows, the Reserve Bank of New Zealand (RBNZ) has said that New Zealand’s rates will need to stay low, for longer in order to achieve its economic goals. This means that borrowers today are enjoying an unprecedented level of low interest which makes money go further when it comes to your mortgage.

Following more subdued performance in 2019, the RBNZ has predicted the pace to pick up for New Zealand’s domestic economy spurred by higher wage growth, greater investment into infrastructure and spending on services curtesy of the Government. This renewed economic confidence will have a ripple effect across New Zealand, with business owners, investors and workers all encouraged to leverage assets and spend in the most popular place Kiwis create wealth – the residential property market.

Across the board, economists, spectators and marker hawkers have predicted residential housing inflation of between five and eight percent. For the average New Zealand home which costs $607,500, according to the REINZ, that’s a rise in capital of nearly $50,000 – making it an excellent time to upgrade your current home or purchase a rental asset before the market reaches fever-pitch.


Just like the upward trajectory picked for New Zealand’s housing market in 2020, the new year signals change and movement to many Kiwis. From resolutions around lifestyle; professional and career changes; or a new home, school and neighbourhood – there’s a transformative feeling in the air that helps to encourage a new wave of buyers to act.

As competition across the market picks up, so too does the action in our sizzling auction rooms. You may have noticed that in times of positive market performance, the number of sales by auction tends to rise, largely owing to the fact that savvy sellers understand the transparent nature of an auction is the best way to secure optimal market value.


While preferable buying conditions and a mood of change encourage more buyers and competition across the market, the summer months also offer some easy ‘sale hacks’ for would-be sellers. From something as simple as opening the windows up wide, to focussing attention on the lush green in our gardens and warm natural sunlight – listing your property for sale over summer means it can be shown at its absolute best.

Taking advantage of higher foot traffic, more ‘round-the-barbeque’ chatter and time to stop and consider property sales, buyers also often become more active over summer simply because they have more time and energy to make the big decisions.

Signalling not only the new year, but the dawn of a new decade, good things are said to come in pairs and Bayleys salespeople across the country reckon that 2020 is going to be a boomer.

If your new year’s plan includes making a move or marketing your home for sale, speak to the professionals at Bayleys to find out how New Zealand’s largest full-service agency can offer value-added service as well as Airpoints and the reach that others can’t.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Eyes on the prize

Global friction and domestic headwinds make for subdued economic progress into 2020, but news is pretty good for borrowers, says economist Cameron Bagrie.

House-hunters eyes low one and two year interest rates currently offered by New Zealand’s banks may be missing the bigger picture, says Cameron Bagrie chief economist and managing director of Bagrie Economics.

“Sure, we’ll take the windfall from borrowing for less, but the number to keep to keep an eye on is the one banks use to assess your ability to service a loan.

“Banks use higher (more conservative) interest rates to make this assessment, which are presently in excess of six and higher than seven percent for some institutions.

“If these start to move lower, they’ll make a big difference on the ability to borrow,” Bagrie says.

“Financial markets are anticipating the Official Cash Rate (OCR) is likely to fall almost 50 basis points in the coming six months. The Reserve Bank of New Zealand (RBNZ) is saying interest rates will remain low for a long time. However, the longer interest rates remain low, the more pressure there will be for rates used to assess loan serviceability to move down.”

This, Bagrie explains, has the potential to inspire an uptake in activity across the residential housing sector as borrowers quite simply, have the ability to borrow more.

“Being able to borrow more doesn’t really change the affordability of a house relative to income, but it does make entering the market that little bit easier,” Bagrie says.

“Recent sales data has shown a definite lift in residential sales activity, some of which is seasonal, some which can be attributed to there being a better landscape for borrowers.”

Low interest rates stimulate the market and deposit rates are now extremely low as well. Bagrie says that these factors are encouraging borrowers to reinvestigate investment yields, while strong population and migration growth foster an environment where plenty of hands still compete for a rung on the property ladder.

New Zealand’s economic growth has slowed from four to 2.1 percent which is partly reflected in depressants such as a critical shortage of skilled labour. Bagrie says that while the economy just can’t grow as fast when running low on resource, 2.1 percent is sluggish and there’s cause for care.

“There are reasons to be cautious but there is also a real danger if negativism takes hold and Kiwis talk themselves into a downturn.”

Bagrie notes that we need to be careful not to mix a slower economy with a down-turn, adding that growth of 2.1 percent is still growth, though mediocre.

“For borrowers, a key message is that we can expect an elongated period of exceptionally low interest rates.

“Punters worried about the interest rate cycle taking a U-turn can breathe easy. Growth is subdued, inflation remains low and looks set to remain so.”

Policy aside, Bagrie says some of the more interesting comments of late have come out of the International Monetary Fund’s (IMF) recently released Article IV Consultation with New Zealand.

Suggestions for housing included; dropping restrictions on foreign buyers; implementing tax reform specifically in relation to vacant land; and replacing KiwiBuild with more measures which would take the Government away from their current role as developer.

“While unlikely to change the thrust of government policy, it’s interesting that the IMF has inadvertently acknowledged New Zealand’s benefit by foreign investment,” Bagrie says.

Looking ahead, the global economy is poised to get worse before it gets better. Though, Bagrie notes, New Zealand looks a pretty good place to ride out that storm.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Knowing the score

The introduction of Comprehensive Credit Reporting means that mortgage lenders are now taking a more holistic approach when assessing financial credibility, but just what does that mean for your credit score?

Bayleys property reporter Katharina Charles talks to John Bolton, Chief Executive at mortgage brokerage peer-to-peer lender and advisory firm Squirrel about what you need to know and how you can maximise your chances of securing the finance to buy your dream home.

Designed to provide an indication of creditworthiness, a credit score is a number between zero and 1,000 that tells a financial institution how likely you are to keep up with your loan repayments.

“Many New Zealanders don’t often think about their credit scores, and if they do, see them as a simple assessment of loans and any defaults,” John says.

“However, in 2012 a system called Comprehensive Credit Reporting (CCR) was introduced, giving the bureaus which rate our credit performance greater access to information about personal expenditure.

“The aim of the game is to provide a more balanced view of the individual’s credit history.

“Prior to 2012, credit reporting only extended to previous credit enquiries and default notices, but for the past seven years, CCR has allowed credit bureaus access to personal information pertaining to accounts like credit cards, loans, utilities and telecommunications,” he adds.

This information is collected from seven data points including the electoral roll; account information such as balances and repayment history; debt collections; benefit applications; court records; third tier lending applications such as payday lenders; and credit search history.

“With so much more information available to these credit bureaus, CCR has meant that ongoing financial behaviour is now a key consideration when assessing creditworthiness.

“CCR can reward consumers with better credit scores but can equally have a negative impact on borrowers who do not manage their finances,” John says.

This personal credit information can also influence what interest rate an individual is offered by their institution, which is known as ‘risk-based pricing’.

Would-be mortgagors with an attractive application and a positive credit history are deemed ‘low-risk’ and can be eligible for the best interest rates – which can make quite a difference in monthly mortgage repayments.

According to consumer credit bureau Centrix, the majority of New Zealanders with a credit rating have a score between 650 and 768 which is considered average.

With a score like this, the individual is most likely eligible for standard credit cards, loans and other offers, however take it up a notch to an ‘excellent’ score of 845 or above, and the Centrix says you should be in the running for the very best interest rate offers and services.

If you’re reading this story with heart palpitations, don’t despair John says, by improving financial behaviour today, your credit rating stands to benefit.

“Missed payments and arrears including fines will rapidly drop your credit score and limit your access to credit so it is important to keep up to date with all outgoing and scheduled payments,” he adds.

Other important considerations which can help to improve your personal credit score include active observation; ensuring events such as identity theft or negative behaviour in linked accounts (with a spouse or flatmate) is identified and remedied as early as possible.

For consumers, the space is evolving, with recent changes to the Credit Reporting Privacy Code 2004 occurring in three stages this year, aimed at strengthening the rights of Kiwis to access their information.

“As of October 1, consumers are able to have loans priced upfront by referring to their credit scores without an enquiry impacting on a credit score,” John says.

“For consumers, this is great news – it allows borrowers more power to compare offers and we hope that it will increase competition across the market between lenders,” he adds.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Seeing the light

As spring ushers in longer, brighter days here are four ways to harness the sun and natural light to get the best price for your home.

Spring: it’s a welcome relief after the cold, dark days of winter. The weather can be fickle but the season comes with certain advantages you can count on: longer, brighter days and a revitalised market for selling your home.

Buyers come out in greater numbers in spring, and the signs many of our salespeople are seeing back a market view that this spring will bring a strong pick-up in listings.

So how can you harness the brightness to add value to your property for a successful sale. We’ve drawn on the experience of Bayleys’ nationwide network of sales experts to offer these four ways to harness the sun and natural light to get the best price for your home:

A touch of glass

If you’re in a position to make alterations, optimising the size and location of windows, particularly on north-facing facades, will go a long way to maximise the supply of light bathing interior spaces. Introducing leadlights or glass insets to external doors and entranceways will not only add character, but see you inviting in light as well as guests. Skylights are a highly-effective way to brighten dark internal areas. Features including double-glazing or an ability to open the skylight for ventilation will let you harness the sun’s light without undue heat. Simply cleaning windows and skylights to remove dirt, mould or condensation will make a noticeable difference. Consider replacing dark or heavy curtains with lighter fabrics that allow sunlight to filter in while still maintaining privacy.

Let it bounce

Getting light into your home is just the beginning. Colour schemes based around whites or lustrous neutrals will multiply the advantages by allowing light to bounce. Decorating or staging your home with mirrors and other reflective surfaces such as glass tables and metallic furniture and picture frames will add to the effect. Consideration of things lustrous will also provide another good reason to get started with that spring clean. Relieving your home of surplus furniture and other unnecessary clutter will add to the general sense of airiness. Removing furniture from around windows, in particular, will eliminate unwanted shade and improve the flow of air.

Great outdoors

Similar principles apply outside. Pruning back or removing trees near windows is an obvious start. But the warmer months move the whole focus back towards outdoor living, so it’s worth giving attention to the fabled ‘indoor-outdoor flow’. When considering alterations, think carefully about what will pay off financially, but opening up a wall and adding bi-folding doors or ranch sliders opening onto a deck is likely to make good financial sense. The added feeling of space, light and flow will add to your home’s appeal and ultimately its sale price. Consider a comprehensive review of outside spaces, including decking and garden areas that should make best use of both light and shade. An initial consultation with a landscape design specialist can start from a few hundred dollars, through to several thousand for a fully-planned and implemented garden concept – but if it adds lifestyle and value-enhancing appeal, it’s a good investment.

Solar power

Harnessing the sun to power your home can be a winner for some homeowners, adding to a property’s appeal among buyers. It’s important to weigh up whether solar panels stack up for your home. For an average house, they can be installed for under $10,000 then pay themselves off over time via savings on your power bills. Just how long it takes depends on many factors including the location and aspect of your home, the pitch of your roof, and whether it’s shaded by the neighbour’s trees, as well as power prices and buy-back rates. If it’s already installed and offers ongoing cost savings, a solar installation can add value to your home – keep a record of its performance to show buyers. Its ‘green’ credentials will be an added attraction among eco-conscious buyers.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Home loan rule change gives leg-up to new buyers

Eased mortgage lending restrictions have sparked a surge in activity from buyers seeking a first foothold on the property ladder.

The relaxation of lending restrictions for purchasers with smaller deposits has been a boon for first-home buyers, who have taken up the lion’s share of newly-permitted lending this year.

Since January, banks have been allowed to make as much as 20 percent (up from a previous limit of 15 percent) of their residential mortgage lending to owner-occupier buyers with a deposit of less than 20 percent of the value of the home. There is a possibility the Reserve Bank will further relax these restrictions when it releases its next financial stability report in late November.

Out of the just over $4 billion of lower-deposit lending – with a higher than 80 percent loan-to-value ratio (LVR) – between January and July, first-home buyers have taken up more than two thirds ($2.7 billion). This is more than double the share that has gone to other owner-occupier buyers, according to Reserve Bank figures which give a monthly breakdown of mortgage lending by borrower type.

In July alone, first-home buyers took up $447 million of this category of lending, which represented a rise of 60 percent since January – more than double the 27 percent increase recorded over this period by other owner-occupier buyers. Total lending across all LVR ranges in July to those buying for the first time topped $1 billion, and was up by a half over the six months.

While recent signs also point to improving fortunes for investors in residential rental properties, the share of lower-deposit lending that goes to investors is small. This reflects the fact that under current Reserve Bank rules the vast majority of investors need a deposit of at least 30 percent before they become eligible for home lending.

July figures from property data specialists CoreLogic show that first-timers’ share of the home-buying market is at an historically-high level, with this group now accounting for nearly one in four purchases nationally. CoreLogic says this reflects favourable factors such as their access to KiwiSaver for a deposit and a growing willingness to compromise on the location or type of property they are prepared to consider.

Bayleys Research manager Ian Little says strong activity in the market by first-home buyers reflects a number of tailwinds, with easier access to money via the relaxed LVR lending rules, along with lower interest rates, prominent among them.

“The easing of the LVR speed limits on home lending means that a greater number of buyers now have an opportunity to purchase with a lesser deposit than they would have needed in recent years – and this has been particularly helpful for first-home buyers trying to scrape together their first deposit.

“The relaxed lending rules, along with an ability among some buyers to access their KiwiSaver accounts to help fund a first-home deposit, is helping to bring a viable deposit within reach for more buyers,” says Little.

“Meanwhile, a flattening of price activity in some markets, particularly Auckland and Christchurch, is also helping to improve housing affordability generally.”

On top of this, Little says, home buyers of all types are continuing to reap the benefits of more affordable mortgage repayment costs thanks to an extended period of record-low borrowing rates.

“In combination, all of these factors in the market are delivering a significant boost to the prospects of many who are striving to get a foothold on the housing ladder,” he says.

“A number of these positive influences are likely to remain in play for an extended period of time, with the possibility of an additional lift to buyers in the form of a further loosening of LVR lending rules which could come as soon as the latter part of this year.”


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700

CategoriesMarket Updates

Risk shake-up puts focus on insurance

Major natural disasters have seen insurers change the way they calculate risk, meaning homeowners and buyers need to reassess the cost of protecting their homes.

From earthquakes to rising sea levels, flooding and drought, there’s nothing constant or secure about life on Earth. It has always been fraught with risk, and that’s why property insurance was invented.

But, while the planet has been shifting and erupting for 4.5 billion years, “all-risk” property insurance – covering floods, storms, earthquakes and volcanic activity – has only been available in New Zealand since the 1960s.

For the past 50 years, it’s worked on a standard model. But recently the big insurers have started to change the way they calculate and price risk, which is impacting on owners and buyers of kiwi homes.

In the past, insurance companies looked at risk on a macro scale and spread the costs across all of their customers. But in response to the threat posed by rising sea levels and New Zealand’s ever-present seismic dangers – as highlighted in recent years by quakes in Canterbury, Wellington and Kaikoura – insurers are mitigating their risks.

“The move is a response to the way insurance is looking closely at the balance of risk,” says Richard Deakin, an insurance expert with CoreLogic. “A lot of what we’re seeing is in response to Christchurch – also climate change is having an impact – but insurers are taking an almost philosophical approach.

“Their view is that they’re trying to make it fairer – why should somebody in a high-risk area or home be subsidised by somebody who is at a much lower risk?”

The results of these changes are, as Deakin explains: “If you live in a risky house in a risky location, you’re going to pay more for your insurance.”

It’s a double-whammy that will affect some homeowners twice. Not only are insurers taking into consideration your location, but your home type too.

For example, in Christchurch certain dwellings withstood the quakes better than others: open-plan, glass-and-steel homes were generally outperformed by older, more traditional designs.

For those in lower-risk areas or with less earthquake-prone homes, the forecast is for lower premiums. But with the Earthquake Commission’s (EQC) new insurance legislation having only just taken effect, it’s difficult to predict what some customers might save. While the level of EQC’s dwelling cover has been increased to $150,000, its $30,000 contents cover has been removed.

“Whether we’ll see an immediate drop in insurance prices in lower-risk areas – I don’t know,” Deakin says. “Anecdotally, I’ve heard of friends in Auckland who have saved money. But even if premiums in areas with less risk don’t fall, they’re less likely to increase as much over coming years.”

Regardless of premiums, insurers’ increased scrutiny of a home’s earthquake resilience and location means that if you’re buying a home, insurance should be a priority.

Insurers are no longer giving automatic cover to homes in disaster-prone areas, even to existing customers, and can require new building assessments.

“The process of arranging insurance can take over two weeks, and then it can still fall through,” says Deakin. “If you leave your insurance until the last minute then find you can’t get cover, your finance is going to fall through. You need to get it in place from the beginning and make it a condition of sale.”

If you’re buying a home in a risky area, you’ll need to factor in any future premium increases too, and ensure that you have the correct level of cover to rebuild should the worst happen. Online tools are invaluable when working out the level of insurance you require.

“A majority of New Zealanders are under-insured,” Deakin says. “It’s important not to guess the level of cover you need. If you’re a little over-insured that can be a good thing, because in a large emergency building costs increase.”

Nobody likes to dwell on being affected by a natural disaster, but it’s one of the realities of the New Zealand lifestyle. With the right level of insurance, you can ensure that if the worst does happen, you’ll have it covered.


Contact us today

Angela Webb
Licensed under the REA Act 2008
Mobile: +64 27 349 1997
Office: +64 3 375 4700