#home loan broker auckland

[kiwi-mortgages]

Buying a home can be an exciting experience. But there are many options and factors to consider, including the loan type and rate, deposit amount and length of time you have to pay it off. The best way to get the best deal is by talking directly with a licensed broker - especially when there are so many variables at play.

For more information visit Kiwi Mortgages official website.

[fundmaster]

Refinancing vs. Staying Put: What's Best for NZ Homeowners?

For New Zealand homeowners, deciding whether to refinance or stick with their current mortgage depends on several factors. Refinancing Mortgages can offer benefits such as lower interest rates, reduced monthly payments, or access to home equity for renovations. With fluctuating interest rates, 2024 may present opportunities for homeowners to lock in better deals, especially if current rates have decreased since their initial loan.

However, staying put can also be advantageous, particularly if breaking the existing loan incurs high penalties. Some homeowners may value stability over potential savings, especially if they have a fixed-rate mortgage and are close to the end of their term.

Ultimately, the choice comes down to personal financial goals. Refinancing may be a smart move if the long-term savings outweigh the costs, but for others, maintaining their current mortgage could provide peace of mind. Consulting a mortgage advisor can help weigh the options effectively.

[classicpropertynz]

How To Finance Your First Investment Property Successfully?

Investing in real estate, especially in a dynamic city like Auckland, can be a lucrative venture. However, the initial hurdle for most aspiring investors is securing financing for their diverse property investment options in Auckland. If you're eager to enter the world of real estate investment in Auckland, here’s a comprehensive guide to help you navigate the financial landscape.

Know Your Budget and Financial Capacity

Before diving into investment property opportunities, it's crucial to assess your financial situation realistically. Calculate your savings, evaluate your credit score, and determine how much you can afford to borrow. Auckland's property market can vary widely in pricing, so setting a clear budget ensures you're targeting properties within your financial reach.

Explore Mortgage Options

For most first-time investors, a mortgage is the gateway to purchasing an Auckland investment property. Research different lenders and mortgage products to find one that suits your needs. Consider factors like interest rates, loan terms, and whether you qualify for government-backed loans or first-home buyer schemes. These options can significantly ease your financial burden when acquiring your first property.

Save for a Deposit

In Auckland, property purchases typically require a substantial deposit. Aim to save at least 20% of the property’s purchase price to secure a favorable mortgage deal and avoid additional costs like Lender's Mortgage Insurance (LMI). The larger your deposit, the better your chances of negotiating favourable loan terms, such as lower interest rates.

Consider Alternative Financing Strategies

If traditional mortgages seem daunting, explore alternative financing strategies such as joint ventures, vendor financing, or property syndicates. These options can provide more flexible terms and lower entry barriers for investment property ownership, especially if you have limited capital or credit history.

Build a Strong Financial Profile

Lenders scrutinise financial profiles closely before approving loans. Strengthen yours by reducing debt, maintaining a stable income, and improving your credit score. A robust financial profile increases your chances of loan approval and allows you to negotiate better loan terms for your Auckland investment property.

Research Government Incentives

In Auckland, various government incentives are aimed at first-home buyers and property investors. Explore schemes like the First Home Grant or KiwiSaver HomeStart grant, which can provide financial assistance or help you leverage your savings for a deposit on an Auckland investment property.

Plan for Additional Costs

Beyond the property purchase price and mortgage repayments, budget for additional costs such as legal fees, stamp duty, property maintenance, and insurance. Factor these expenses into your financial planning to avoid surprises and ensure sustainable cash flow from your Auckland investment property.

Seek Professional Advice

Navigating the complexities of financing your first Auckland investment property can be daunting. Seek guidance from financial advisors, mortgage brokers, or real estate professionals with local expertise. They can offer invaluable insights and help you make informed decisions that align with your investment goals.

Conclusion

By following these steps and staying informed about the Auckland investment property market, you can position yourself for success as a first-time real estate investor. Remember, thorough research, careful financial planning, and leveraging available resources are key to financing your dream property in this vibrant city.

[travismcdonogh]

Home Loan Broker Auckland

[bestmortgagesnz]

Your Guide to Bridging Finance Tauranga _ Best Mortgages

How Bridging Finance Works in New Zealand and Its Key Features

It is a type of finance or home loan with which you can buy a new property, before you’ve sold your existing home. It is a short-term and interest-only mortgage loan, which is also commonly referred to as “tideover” finance. It allows you to make a quick move on your next property, without settling your existing debts with the current residence. However, it comes with a cost, as you’ve to pay for both the mortgages, at the same time. You can avail a bridging finance for a period of 12 months, and during that time frame, you pay your present mortgage, along with the interest-only on the new property.

Here in New Zealand, a renowned and popular mortgage broker like “Best Mortgages” can help find the right lender or bank that offers bridging loans to individuals at comparatively lower interest rates and on easy repayment terms. You can partner with one such consultant, as you receive FREE quotes of some of the top private lenders in Auckland, Tauranga or Hamilton. In this way, one can avail both ‘Closed’ and ‘Open’ bridging loans, without having sold their existing home.

What Experts Say about Bridging Finance in Tauranga or Any Other City

If you’ve made up your mind and bent over buying a second home, a bridging finance Tauranga or in any other place is the right solution, without having to sell your existing residence. This is one of the key features of an ‘Open’ Bridging Finance, where your lender would work with you in a manner, structuring your loan for a period of 6 months or till your existing home is sold (whichever is earlier), to make things manageable for both parties. But, if your property does NOT sell on time or sells for a lesser value than expected, you could be left in a critical financial situation.

Therefore, it is best advised to team up with a registered and licensed mortgage broker that can assist you through the right steps and processes of acquiring a bridging loan in New Zealand. In the case of a ‘closed’ bridging finance NZ, it is less risky, as here you’ve already sold your existing home and agreed to a settlement date. In the meantime, you can go for buying a new property that settles before the sale of your existing one. This is why a mortgage loan consultant in Tauranga or Auckland needs to be hired for getting the right suggestions that have little or no financial implications.

[oceanlinda1]

New Post has been published on https://www.oceanhomeloans.com.au/testimonial/sarah-m-new-auckland-qld/

Sarah M, New Auckland, QLD

I cannot speak highly enough of Brad from Ocean Home Loans! I am an ex bankrupt and tried to talk with a few brokers without much success or ridiculous deposit requirements! Brad helped me every single step of the way and his system is so streamlined and easy to use and understand! Long story short, […]

Ocean Home Loans

[oliver-broomfield]

[nonbankloans-blog]

What to Expect from your Mortgage Broker Auckland?

A mortgage broker Auckland acts as a bridge between you and your mortgage. From finding the best mortgage lender to getting the best terms and rates, he can simplify the task for you. By working with experienced financial mortgage brokers NZ, you will be able to find the right mortgage for your needs. You just have to get in touch with a mortgage broker and he will take care of everything else.

The rightly chosen mortgage broker can help you get the best mortgage rate for your needs. If you are looking forward to hiring a mortgage broker Auckland, here is what to expect from him.

· Do all the Legwork Most mortgage brokers maintain a cordial relationship with mortgage lenders. You may not even know about all of them. A mortgage broker may even make you aware of the certain lenders who have onerous payment terms in their contracts. That’s why it is important that you do some research to find the best mortgage broker for your needs. To get an idea about the mortgage you can apply for, you can simply search for rates online. This way you will get an idea about what to expect from your mortgage broker. You will be able to compare rates easily and you will get knowledge when assessing the credibility of mortgage broker.

·  Have Better Access There are many mortgage lenders who work exclusively with financial mortgage brokers NZ to get suitable clients for them. You may not even be able to get in touch with some mortgage lenders directly to get a mortgage. In fact, brokers may also get good rates from the lenders in comparison to you because a mortgage broker can help him with his business more than you can. You will also be able to save money while working with a mortgage broker. You may not be able to get in touch with all lenders who can provide you with the best mortgage rates and that’s why we have mortgage brokers to work for us.

· Manage your Fees When you want to get a mortgage, there can be a wide variety of fees that can be associated with your mortgage including application fees, origination fees, and appraisal fees. You won’t always be ready to pay the fees. But when you are working with a mortgage broker, he can get lenders to waive some or all of these fees that can save you several thousand.

For people who are looking for the best mortgage broker Auckland , NonBk Limited is your one-stop destination. We can help you find the best mortgage lender for your unique situation. We will make you compare different mortgage rates so that you can find the best mortgage rate for you. When the bank says no to home loans Auckland , we will be there to help you get the best loan regardless of your credit score, low deposit, etc. If you want to learn more about our services, all you have to do is visit our official website.

[firstratemortgagesblog-blog]

What do you Need to Apply for 100 Finance Home Loan NZ?

With the help of a guarantor, you can apply for 100 home loans NZ . In most cases, people who apply for this loan, choose to use their parents as guarantors to get access to the high loan amounts. At the same time, the guarantor must have enough equity in their property that can be used as security in case the applicant is not able to meet the repayments. The most important benefit of this type of loan is that you can get a home loan with no deposit.

With this type of loan, you can avoid expensive lenders mortgage insurance (LMI) and qualify for a lower interest rate. There are a few things that you would need to apply for 100 finance home loan NZ . Let us take a look at them.

· Good Credit If you are planning to qualify for a 100 finance home loan NZ, it is necessary that you take the responsibility of your debts from the beginning. Maintaining good credit history is more important than you will ever know. If you cannot do it on your own, reach out to the mortgage brokers who will guide you and tell you ways to maintain and improve your credit score. It is essential that you know that the lenders in New Zealand are strict about lending loans and they will only lend if they find you worthy of the loans.

·Stable Income Source A stable income source is an integral variable when you want to get 100 home loans NZ. Any applicant applying for the loan must have a strong and ongoing source of income that shows their capability of paying off the loan. The applicants that have a stable income source are better chances of getting loans when compared to other applicants. Professionals that belong to the fields like accounting, medicine or law are considered to have stable employment and hence, have better chances of getting a 100 finance home loan NZ.

· Well-maintained Repayment History Lenders are very conscious about lending loans. They want to make their mind before they lend loan to anyone. It is more like making the lender believe that you are worthy of their trust and they should lend you. In most cases, the lenders would like to take a look at your repayment history and find out if there are any delays in your debt repayment. It includes rents, credit cards, and personal loans.

If you want to get the best 100 finance home loan NZ for you, First Rate Mortgages is the company you must get in touch with. We are experienced finance brokers NZ working with us, who will ensure that you get the best loan benefits without any hassle. After understanding your unique situation, we will ensure that you find the best loan options for you. You can also get in touch with our team to make the right decision. Visit our official website today to learn more about  mortgage broker south auckland .

[kiwi-mortgages]

It’s easy to be overwhelmed by the big numbers and figures that have to be discussed when dealing with a home loan broker in Auckland. However, it's important to remember that you will only ever get the best deal by working with an expert, who can take the time to explain things in detail. Kiwi Mortgages can help you to find affordable low-deposit home loans that suit your needs.

[realestatediary-12]

How to Find a Good Local Mortgage Broker?

At the point when the vast majority conclude that they need to purchase a house, the primary thing that they do is head down to their local bank where they hold their present account to check if they are qualified to take out a home loan. While this could seem like the most reasonable thing to do, it probably won't be the smartest.

Although your bank could seem like the smartest choice for getting a mortgage - similarly as with most different things - you could save yourself a ton of time and cash over the long run by shopping around, yet it can likewise be difficult to work out which home credit is the right arrangement for you.

My idea is to find yourself a decent mortgage broker.

Be that as it may, where would you be able to find a decent Local Mortgage Broker?

You could utilize one of the mortgage brokers from The Real Estate Diary, or on the other hand if you need to look somewhere else here are a couple of tips to help you.

1. Finding a Mortgage Advisor or Broker Online

The web has worked on the method involved with getting monetary counsel in numerous ways.

One way is by associating would-be mortgage borrowers with local financial advice providers whether that is mortgage brokers, banks, or some of the non-bank moneylenders.

While searching for a Local Mortgage Broker I would constantly try to go for one who is an 'entire of market' broker, as these sorts of brokers approach more advanced choices.

Likewise best to keep away from those brokers that are claimed by a bank or mortgage providers as they are attached to only one of perhaps one or two moneylenders and hence you pass up the full decision.

2. Asking Friends or Family

One more incredible method for finding a decent Local Mortgage Broker is to find out if they have managed anyone great themselves.

Certain individuals probably won't approve of doing this as they would rather not share their monetary plans or objectives with individuals that they know, however, if you wouldn't mind people knowing that you are hoping to purchase a house, then, at that point, having one of your companions or relatives suggest a decent broker could be an extraordinary method for finding one in your area who has a decent reputation.

3. Google Search Mortgage Brokers

You could essentially enter the term 'Local Mortgage Broker' or 'mortgage advice' into Google to see a list of mortgage brokers in your neighborhood; regularly the list might include those brokers outside of your area.

It may very well be smarter to Google 'West Auckland mortgage broker' or 'North Shore mortgage broker' depending on where you reside or work. To get a broker that is much more local you should have a go at being more specific and type 'Hobsonville mortgage broker' or 'West Harbor mortgage broker' and so on … relying upon your area.

Conclusion

Mortgages are normally one of the biggest monetary responsibilities that individuals have, so it merits guaranteeing that you can get the best guidance and have simple admittance to progressing advice.

This is the place where a decent Local Mortgage Broker can truly help, and possibly save you a huge amount of cash.

[orbemnews]

People are panic buying homes as prices skyrocket around the world “This time last year we thought it was going to be 2008 all over again,” said Kate Everett-Allen, the head of international residential research at real estate consultancy Knight Frank. The fear was that house prices would collapse, as they reliably had done in past economic downturns. An increase in bankruptcies and unemployment would squeeze disposable incomes and make it difficult for highly indebted homeowners to keep up with their mortgages. Those fortunate enough to own second homes would be forced to sell to build up cash reserves, putting even more downward pressure on prices. “Actually, none of that happened,” added Everett-Allen. Instead, house prices soared even as the world suffered its worst slump since the Great Depression. From New Zealand to the United States, Germany, China and Peru, the same phenomenon has taken hold: home prices are skyrocketing, and many buyers are panicking. Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades. So is this a bubble about to burst? No, according to Everett-Allen. Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers, she said. “That will play out over the course of the rest of this year and next, and then there might be something of a lull,” she added. The Covid effect In an unexpected twist, the pandemic has benefited house prices. That’s because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying. These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices. “If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes,” said Richard Donnell, research director at UK property platform Zoopla. As people were forced to transform houses into offices and classrooms, it didn’t take long for a “race for space” to take hold. Wealthier individuals in several countries have fled cities for larger suburban homes with more outdoor space in the anticipation that they won’t need to commute into central offices as much even after the pandemic ends. Many of them are financially in a better position than they were before the pandemic hit, since they’ve spent less on vacations and eating out, and can therefore spend more on house purchases. For example, in the United Kingdom, commuter towns within easy reach of London, such as Bishop’s Stortford and Winchester, have seen property values surge. “Anything with a home office within an hour train ride of London is going for 10% above market value,” according to Daniel Harrington, international head of growth at upmarket estate agent Fine & Country. One trend Harrington has observed in capitals such as London and Paris sees wealthy executives trading their centrally located houses for something bigger but cheaper further out of the city, leaving them with enough cash to buy a small apartment downtown and a holiday home elsewhere. That’s heightened domestic demand for property in places such as the French Riviera, which is traditionally dominated by foreign buyers. In the seaside resort town of Ilfracombe in southwest England, Lee Hussell, the director of estate agency Webbers, has sold two properties in recent months for £100,000 ($139,000) above the asking prices. “In 38 years of buying and selling homes I haven’t witnessed a market like it,” commented Henry Pryor, a UK buying agent. “There have been stories of buyers paying £10,000 ($14,100) plus just to be able to view a property.” With inventory levels in the United Kingdom some 30% below the norm, people are “panic-buying properties,” Pryor added. Transactions have been tracking above average every month since November, with March notching 180,000 sales, almost double the average for the same month over the past 20 years. “Twelve months ago, people were panic buying toilet paper for fear they might run out. That’s very much the sensation we have today [in the housing market],” he said. House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That’s the highest annual growth rate since 2014, according to the Office for National Statistics. And it’s not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors. House prices rose 9% in 2020 and have continued to climb, with the median price of an existing home hitting a historic high of $329,100 in March. In one staggering example of how frenzied the market has become, realtor Ellen Coleman received 76 all-cash offers on a $275,000 fixer-upper in suburban Washington D.C. within three days of listing the property. The four-bedroom, 1,800 square-foot home sold for $460,000, a 70% increase on the asking price. From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity. In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. “It’s a very strong market and prices are going higher and higher,” Heming told CNN Business. In Portugal, foreigners have been snapping up houses despite not being able to view the properties they’re buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data. Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal’s managing partner. “We have sold quite a lot of that blind,” Roberts said, adding that foreign buyers want fresh air, open space and a picturesque bolthole to escape to for the next pandemic. “When travel opens up, I think we’re in for three months of pandemonium.” He recently sold an apartment in coastal Cascais, just west of Lisbon, for €3.5 million ($4.2 million) to a South African who has never visited the town. In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown. “Covid led to activity coming back into the market,” said Hitesh Oberoi, the CEO of Info Edge, which owns India’s largest property portal, 99acres.com. “A lot of people want bigger homes,” he added. “Many people felt that because the economy was tanking they would get good deals.” Oberoi said that falling interest rates and lower duties on transactions in some parts of the country have also helped, but that the market is slowing down once again as India battles a devastating second wave of the virus. Governments move to cool markets In several countries, governments are already looking at ways to prevent their housing markets from overheating. In New Zealand — where median prices for residential property increased by more than 24% over the year to March to a record high — the government is under pressure to stabilize the market, according to Wendy Alexander, the acting CEO of the Real Estate Institute of New Zealand. In March, the government announced a string of measures that they hope will “cool demand from investors” and slow the pace of price growth, Alexander said. For example, tax loopholes have been tightened and ministers are considering clamping down on interest-only loans to speculators. In China, where house prices in “tier-1 cities” including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, “Beijing is more determined than ever to rein in property leverage,” analysts at Societe Generale said in a note last week. “Over 30 cities, accounting for one-fifth of national sales in 2019, have rolled out major tightening measures,” said Michelle Lam, Societe Generale’s greater China economist. “These include buying and selling restrictions, credit restrictions, increasing the holding period for tax exemptions and fixing loopholes via fake divorces,” she added. In the past, some couples have filed for divorce to get around caps that limit property ownership for families. But even with greater curbs in place, Societe Generale analysts expect the correction in house prices in China to be modest given that lending conditions will remain favorable and because of sound demand for urban property, limited supply in top-tier cities and persistent interest in property investment. Banking regulators elsewhere could also tighten mortgage lending rules in order to cool markets, according to Matthias Holzhey, head of Swiss real estate investments at UBS, who points to regulation more broadly as a possible threat to house price growth. For example, policymakers could increase taxes on land and transactions, particularly as governments seek to repair public finances following the pandemic. Why the boom is unlikely to bust But even as governments train their sights on the housing market, analysts are not predicting a house price correction. Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets. Crucially, interest rates are expected to remain low. “Historically, periods of weak house prices have been triggered by rising interest rates,” said Holzhey. Rock bottom rates have been a key driver of prices, particularly in the United States and Europe, because they make borrowing more affordable. Mortgage rates across the 19 countries that use the euro averaged just 1.3% in March, according to official statistics. Even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they’re comfortable to let their economies run hotter than normal if it will help juice growth and create jobs. “Mortgage rates will remain structurally low and supportive of market growth for the next couple of years,” said Adam Challis, Jones Lang LaSalle’s executive director for research and strategy across Europe, the Middle East and Africa. In other words, don’t expect this boom to bust any time soon. — Anna Bahney contributed reporting. Source link Orbem News #buying #homes #PANIC #People #Prices #skyrocket #World

[bestmortgagesnz]

Know About Bridging Finance Tauranga

What is Bridging Finance and How Does it Work in New Zealand?

A Bridging Finance is a type of a loan, which can be used for buying a new home or property, before you’ve sold out your current residence. This type of loan is useful for purchasing a second property, without actually selling your first. In New Zealand, you can take bridging finance for a period of up to 1 year or 12 months. In that corresponding period, you can pay off your current mortgage, along with the interest on the new house. Here, a company like “Best Mortgages” can be of great help, as it provides such bridging loans to all home buyers in cities like Tauranga, Auckland and Hamilton.

There are two main types of bridging finance. Closed bridging finance and open bridging finance. The first type of loan applies to borrowers who have already sold their existing property, and have agreed on a fixed settlement date. The maximum time limit for a closed bridging finance is 12 months, as the bank or lender would like to know the exact date and the amount your present house would be sold for. Whereas, in case of an open bridging finance, it applies to individuals who haven’t sold their existing house, and bought a new property.

How Can a NZ Mortgage Company Help Get Bridging Finance in Tauranga?

With the help of their knowledgeable and qualified mortgage professionals, you can now inch closer to buying your dream home or villa, without selling your current house. Technically speaking, you’ve to manage two loans at one time, wherein the bridging finance Tauranga loan can be designed to be used as interest-only, thus minimizing your outgoings. Here, an expert mortgage broker or a loan company NZ can help understand the key technicalities.

When you compare open bridging loans to closed bridging loans, the former is way riskier, as the bank or lending institution does not know, as to when your present house would be sold, and how much your existing property is going to fetch in the market. Therefore, the monthly interest rates can be higher than the closed finance option. So, it is always advised to consult with a reputable mortgage firm that can guide you through the process of bridging loans in New Zealand, and which are the best home finance options for your individual needs.

[dipulb3]

People are panic buying homes as prices skyrocket around the world

New Post has been published on https://appradab.com/people-are-panic-buying-homes-as-prices-skyrocket-around-the-world/

People are panic buying homes as prices skyrocket around the world

“This time last year we thought it was going to be 2008 all over again,” said Kate Everett-Allen, the head of international residential research at real estate consultancy Knight Frank.

The fear was that house prices would collapse, as they reliably had done in past economic downturns. An increase in bankruptcies and unemployment would squeeze disposable incomes and make it difficult for highly indebted homeowners to keep up with their mortgages.

Those fortunate enough to own second homes would be forced to sell to build up cash reserves, putting even more downward pressure on prices.

“Actually, none of that happened,” added Everett-Allen.

Instead, house prices soared even as the world suffered its worst slump since the Great Depression. From New Zealand to the United States, Germany, China and Peru, the same phenomenon has taken hold: home prices are skyrocketing, and many buyers are panicking.

Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades.

So is this a bubble about to burst? No, according to Everett-Allen. Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers, she said.

“That will play out over the course of the rest of this year and next, and then there might be something of a lull,” she added.

The Covid effect

In an unexpected twist, the pandemic has benefited house prices.

That’s because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying.

These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices.

“If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes,” said Richard Donnell, research director at UK property platform Zoopla.

As people were forced to transform houses into offices and classrooms, it didn’t take long for a “race for space” to take hold.

Wealthier individuals in several countries have fled cities for larger suburban homes with more outdoor space in the anticipation that they won’t need to commute into central offices as much even after the pandemic ends.

Many of them are financially in a better position than they were before the pandemic hit, since they’ve spent less on vacations and eating out, and can therefore spend more on house purchases.

For example, in the United Kingdom, commuter towns within easy reach of London, such as Bishop’s Stortford and Winchester, have seen property values surge.

“Anything with a home office within an hour train ride of London is going for 10% above market value,” according to Daniel Harrington, international head of growth at upmarket estate agent Fine & Country.

One trend Harrington has observed in capitals such as London and Paris sees wealthy executives trading their centrally located houses for something bigger but cheaper further out of the city, leaving them with enough cash to buy a small apartment downtown and a holiday home elsewhere.

That’s heightened domestic demand for property in places such as the French Riviera, which is traditionally dominated by foreign buyers.

In the seaside resort town of Ilfracombe in southwest England, Lee Hussell, the director of estate agency Webbers, has sold two properties in recent months for £100,000 ($139,000) above the asking prices.

“In 38 years of buying and selling homes I haven’t witnessed a market like it,” commented Henry Pryor, a UK buying agent. “There have been stories of buyers paying £10,000 ($14,100) plus just to be able to view a property.”

With inventory levels in the United Kingdom some 30% below the norm, people are “panic-buying properties,” Pryor added. Transactions have been tracking above average every month since November, with March notching 180,000 sales, almost double the average for the same month over the past 20 years.

“Twelve months ago, people were panic buying toilet paper for fear they might run out. That’s very much the sensation we have today [in the housing market],” he said.

House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That’s the highest annual growth rate since 2014, according to the Office for National Statistics.

And it’s not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors.

House prices rose 9% in 2020 and have continued to climb, with the median price of an existing home hitting a historic high of $329,100 in March.

In one staggering example of how frenzied the market has become, realtor Ellen Coleman received 76 all-cash offers on a $275,000 fixer-upper in suburban Washington D.C. within three days of listing the property. The four-bedroom, 1,800 square-foot home sold for $460,000, a 70% increase on the asking price.

From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity.

In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. “It’s a very strong market and prices are going higher and higher,” Heming told Appradab Business.

In Portugal, foreigners have been snapping up houses despite not being able to view the properties they’re buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data.

Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal’s managing partner. “We have sold quite a lot of that blind,” Roberts said, adding that foreign buyers want fresh air, open space and a picturesque bolthole to escape to for the next pandemic. “When travel opens up, I think we’re in for three months of pandemonium.”

He recently sold an apartment in coastal Cascais, just west of Lisbon, for €3.5 million ($4.2 million) to a South African who has never visited the town.

In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown.

“Covid led to activity coming back into the market,” said Hitesh Oberoi, the CEO of Info Edge, which owns India’s largest property portal, 99acres.com. “A lot of people want bigger homes,” he added. “Many people felt that because the economy was tanking they would get good deals.”

Oberoi said that falling interest rates and lower duties on transactions in some parts of the country have also helped, but that the market is slowing down once again as India battles a devastating second wave of the virus.

Governments move to cool markets

In several countries, governments are already looking at ways to prevent their housing markets from overheating.

In New Zealand — where median prices for residential property increased by more than 24% over the year to March to a record high — the government is under pressure to stabilize the market, according to Wendy Alexander, the acting CEO of the Real Estate Institute of New Zealand.

In March, the government announced a string of measures that they hope will “cool demand from investors” and slow the pace of price growth, Alexander said. For example, tax loopholes have been tightened and ministers are considering clamping down on interest-only loans to speculators.

In China, where house prices in “tier-1 cities” including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, “Beijing is more determined than ever to rein in property leverage,” analysts at Societe Generale said in a note last week.

“Over 30 cities, accounting for one-fifth of national sales in 2019, have rolled out major tightening measures,” said Michelle Lam, Societe Generale’s greater China economist.

“These include buying and selling restrictions, credit restrictions, increasing the holding period for tax exemptions and fixing loopholes via fake divorces,” she added. In the past, some couples have filed for divorce to get around caps that limit property ownership for families.

But even with greater curbs in place, Societe Generale analysts expect the correction in house prices in China to be modest given that lending conditions will remain favorable and because of sound demand for urban property, limited supply in top-tier cities and persistent interest in property investment.

Banking regulators elsewhere could also tighten mortgage lending rules in order to cool markets, according to Matthias Holzhey, head of Swiss real estate investments at UBS, who points to regulation more broadly as a possible threat to house price growth.

For example, policymakers could increase taxes on land and transactions, particularly as governments seek to repair public finances following the pandemic.

Why the boom is unlikely to bust

But even as governments train their sights on the housing market, analysts are not predicting a house price correction.

Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets.

Crucially, interest rates are expected to remain low. “Historically, periods of weak house prices have been triggered by rising interest rates,” said Holzhey.

Rock bottom rates have been a key driver of prices, particularly in the United States and Europe, because they make borrowing more affordable. Mortgage rates across the 19 countries that use the euro averaged just 1.3% in March, according to official statistics.

Even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they’re comfortable to let their economies run hotter than normal if it will help juice growth and create jobs.

“Mortgage rates will remain structurally low and supportive of market growth for the next couple of years,” said Adam Challis, Jones Lang LaSalle’s executive director for research and strategy across Europe, the Middle East and Africa.

In other words, don’t expect this boom to bust any time soon.

— Anna Bahney contributed reporting.

[oliver-broomfield]

[nonbankloans-blog]

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