Should you purchase your first home now?

Whilst it is still too early to understand the full impact of COVID-19 on the property market, those willing to enter the property market now and purchase their first home will benefit from a number of changes.

Interest rates

Currently we are seeing record low interest rates with major banks going to war over mortgage rates. ANZ was the first to slash their interest rate down to 2.79%, however it is Kiwibank that now has the lowest rate at 2.65% per annum and ASB is sitting at 2.69%. As the competition is heating up amongst the banks, so is the demand for houses under $1 million as more buyers enter the market.

But what do low interest rates mean? An interest rate is the percentage you are charged on the amount you borrow, it’s what you pay to use the banks money. A low interest rate means you are paying less to borrow money and have more spending money in your pocket.


The Reserve Bank recently decided to abolish the loan-to-value-ratio (LVR) restrictions on new mortgage lending, you can read the full story here. It was axed during the New Zealand nation wide lockdown due to the COVID-19 pandemic so local banks could continue to support their customers through the impact the virus had. This means you no longer have to save a 20% deposit to purchase your first home. However you will still need to pass the banks credit and income requirements which will include having a job where you feel secure in your employment. If you are applying for the First Home Loan you will need to have as little as a 5% deposit.


Motivated sellers are ready to be realistic

Sellers who already had their property on the market pre-lockdown had high expectations and are now ready to take trusted advice from us on what is realistic. Ina slower market you will have more opportunity to negotiate with the vendor and the agent will help to reach an outcome suitable for both parties. If you see a home you love, don’t be afraid to put in an offer, you never know what the outcome may be.


Investment returns

If you are almost in a position to purchase your first home, speak with your parents about helping you with your deposit. At the moment they would get a 3.5-4% return on their money which is a great investment return whilst also helping you get into your first home.

Purchasing a property with your parents means they will have a share of the property and will be registered on the title of the property. They will be able to protect their investment in your first home and also have a share in the capital gain on the property when you decide it’s time to upgrade and sell.

Read more information on financial help and tips for first home buyers here.

Across our Otago offices we have a fantastic range of entry level homes, ranging from brand new to older homes with stunning views. For Central Otago homes take a look at our listings in Alexandra and Cromwell. For Queenstown-Lakes opportunities take a look at Queenstown and Wanaka, and for further south we have some great homes in Dunedin and Balclutha. If you like what you see please contact one of our sales consultants for more information.