Navigating a Soft Property Market: Why Norfolk Mortgage Trust Stands Strong
As spring arrives in New Zealand, the September QV House Price Index reveals a complex landscape characterised by both emerging opportunities and ongoing challenges. While interest rates have come down, factors such as high property supply and economic uncertainty are limiting significant price increases. In this blog post, we’ll delve a little deeper into the latest insights from the QV House Price Index, and explore how Norfolk Mortgage Trust (NMT) has delivered consistent returns for our investors regardless of changing market conditions.
Key Takeaways:
Market Overview: Optimism is growing as interest rates drop and buyer activity increases, but high property supply and economic concerns are slowing growth.
National Trends: Home values are slowly leveling out across much of the country, with Auckland’s decline slowing to 1.7%, while Wellington faces greater uncertainty, experiencing a 3.2% drop in house values.
Emerging Opportunities: First-home buyers and cautious investors are gradually re-entering the market, spurred by recent Reserve Bank cuts to the Official Cash Rate of 50 basis points.
Market Analysis: A Softening Landscape
The national average home value saw a decline of 0.4% last month and a drop of 1.6% in the September quarter. This is an improvement from the previous month’s figures, which reported a 0.5% decline and a 2% decrease for the quarter ending in August. Currently, the national average stands at $901,920, reflecting a modest increase of 0.3% compared to the same period last year. While the pace of decline has slowed, home values in New Zealand’s major urban centers continue to face pressure from economic uncertainties and rising living costs.
Auckland – The city has experienced its seventh consecutive month of negative growth. The average home value is currently $1,228,955, reflecting a 2.6% decrease compared to last year. Local QV registered valuer Hugh Robson notes that increased buyer activity, especially among developers and investors, is a sign of slow recovery.
Wellington – Facing the steepest declines, Wellingtonʼs home values dropped by 3.2%, with the average home now valued at $837,878. According to local valuer Jack Whiteman, economic uncertainties and job market fluctuations are causing cautious buyer behaviour.
Tauranga – The average home value in Tauranga declined by 1% in September, following a 0.4% drop in August. The cityʼs three-month rolling decline stands at 2.1%, slightly higher than the national average. Despite this, the average home value remains $1,005,282 – 0.3% higher than last year.
Christchurch – The city saw a 0.8% decline in home values this quarter, with a 0.4% drop in September. Senior QV consultant Olivia Brownie attributes this to a rise in spring listings.
Shifting Sentiment
Despite these challenges, buyer sentiment is beginning to shift. With interest rates trending down, first-home buyers and cautious investors are making their way back into the market. James Wilson, QVʼs Operations Manager, observes, “Interest rates have started to come down, and weʼre seeing sentiment shift across much of the country.ˮ This shift may lead to increased competition, gradually absorbing the current oversupply of properties.
The Outlook: Cautious Optimism
Looking ahead, the consensus among experts is one of cautious optimism. The Reserve Bank’s recent announcement that they were cutting the Official Cash Rate (OCR) by 50 basis points will have only strengthened that optimism. A fall in interest rates of this magnitude could significantly further alter buyer sentiment, reinforcing the idea that now is a good time to re-engage with the property market.
Norfolk Mortgage Trust: A Consistent Investment Partner
While the property market finds itself on an uncertain road to recovery, Norfolk Mortgage Trust continues to provide investors with consistent and competitive monthly returns.
With a current rate of 7.50% p.a. (from 30 May to 30th September 2024) our track record speaks for itself.
Our experienced management team’s unwavering commitment to rigorous borrower evaluation, conservative lending practices, and a diversified portfolio make us the ideal partner to help you navigate these challenging times.
With a history of delivering consistent returns, even in uncertain times, we are dedicated to helping you achieve your financial goals with confidence.
Invest with confidence. Invest with Norfolk Mortgage Trust.
Watch our short video to learn more about how the Trust works and what you can expect from your investment.
For more information and the opportunity to discuss Norfolk’s approach to lending contact Norfolk Mortgage Trust today.
Data Source: QV House Price Index for Aug2024