Interest Rates/Market trends

[melly]

Hubby and I plan to rent for at least the first 6 months after we move, so we can get an idea/feel for the city and what the different suburbs are like. After that our dream would be that we would be in a position to buy, but we aren't sure if this could be a reality. The way the housing market is in Australia (where we currently live) the price of real estate is too high for us to be in position to buy as we could not afford the repayments on such a large mortgage. When we started looking at property in NZ we got our hopes up because the price of real estate is about $100,000 less, which would mean a much smaller mortgage for us. But then we started looking at the interest rate and found that this would make the repayment as large, if not slightly larger than what we'd worked out for Australia. So it is now looking like home ownership is still going to be just a dream. The other problem is we don't know much about the NZ market. So a couple of questions:
- what is the current interest rate? Is it going up, down, or staying the same recently?
- Is the market being affected by the interest rate? Are housing prices going up, down, or hovering? What is the prediction for the next 12 months?

The reason I'm starting to worry is all the comments about the cold, damp rentals that I'm reading on here. And the really strict tenancy agreements. I don't mind buying a place that is cold and damp as we could make improvements to change that, but when we're renting there's not much we can do.

Sorry for the long post, I just had to get it all out.

[Spooky]

Here are the loan rates from Lloyd's Bank: http://www.lloydstsb-hongkong.com/rate/loan.asp?ID=1

Seems like interest rates have dipped slightly only. From what I've noticed on the property market, some houses I was eyeing are 10-30K cheaper in a span of 2 months. Then again, these are houses that aren't too attractive to begin with (many of the lower range ones always cite the usual "Needs TLC/ Do-me-up" clause).

[BaldyBeardyBloke]

At the moment, as per the most of the western world, house prices have pretty much stopped going up. People really needing to sell are certainly dropping their prices or accepting lower offers. People building 'on spec' i.e. build and flog off immediately on completion are currently selling at very little profit and certainly below registered value.

Chances are the next 6 months or so will remain a buyers market for housing.

The central bank has just recently dropped it's base interest rate for the first time in 5 years in NZ (although only by 0.25%) with a possible follow up 0.25% drop towards the end of the year.

Normally, this would signal the major banks dropping their rates. There have been some small drops, but the banks have so much invested overseas they will be taking some profit back in the short term to make up for losses. Currently you can get a mortgage with a 2 year fixed rate at around 8.95%. The expectation is that this may drop slowly over the next 6 months. It may be that NZ will see mortgage rates as low (by NZ standards) as 8.5% by the end of the year.

All this is theory of course. Actual events may differ significantly, but that is what the professionals are telling me they are expecting to happen.

[IanR]

There's a full breakdown of NZ mortgages here:

http://www.interest.co.nz/mortgages.asp

as you can see some have fallen, at least a little, recently.

[ourquest]

The fixed rate that you can get from the banks are lower than the floating rate, which points to all the banks anticipating a drop in rates over the next couple of years.

Sales are very flat and this has resulted in an effective drop in selling price to encourage sales. Many properties have had their list prices reduced, and those entering the market are coming in lower than they might have 6 months to a year ago. This whole trend has really taken hold only since April and is likely to stay a buyer's market until the predicted reduction in lending rates causes a perceived upswing in the market.

There are always good buys and bad buys in any market, and with sufficient homework there shouldn't be any need to wait for the "bottom" of the market. It might already be here, and in most cases anything you pay for a house now will seem cheap in 10 years time.