As part of their “Ask an Expert” series published on 28 April, Solution Street spoke with Rupert Gough of The Mortgage Lab to discuss the impact that Covid-19 has had on first home buyers in Auckland. Answering questions submitted by people in the market for their first homes, Gough and the Solution Street team addressed a range of hot button issues including interest rates, property prices, KiwiSaver losses, and bank risk metrics.
Asked about the potential for New Zealand’s interest rates to drop even further than they have during Alert Level 4, Gough noted such predictions are hard to make. He acknowledged that further reductions in interest rates were possible but unlikely and recommended that first home buyers set themselves up in the short-term to protect from potential future increases.
The Solution Street team also discussed the impact Covid-19 has had on Auckland’s property prices. Gough and Director Gary Gordon agreed that early increases in consumer confidence suggest property prices are unlikely to drop noticeably. Overall declines in property market values may be the result of upper echelon homes that have little effect on homes in a first time buyer’s price range and may even push more buyers into this lower price bracket.
Many first home buyers are also dealing with losses to their KiwiSaver investments. Gough recommends that first home buyers speak to their KiwiSaver provider for advice and consider moving their funds to more conservative investment schemes when they begin home shopping.
The Solution Street team also reminds cautious home buyers that homes will never be cheaper than they are right now, encouraging a healthy balance of bravery and practicality to begin climbing the property ladder when the time is right.
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