- According to a property research company, NZ is a buyers’ market now
- The first quarter of the year has seen a slowdown in sales after a decade
- The reasons are Omicron, reduced availability of credit and high mortgage rates
A report by property research company, CoreLogic, has said that New Zealand had a buyers’ market now. It has entered a buyers’ market phase sooner than expected with house sales weakest in a decade.
According to the market update, even though the sales began to slow down in the previous quarter, the trend is more pronounced in the first quarter of the current year. While Omicron could have been one reason for the slowing down of the housing market, higher mortgage rates and reduced availability of credit have also had a big impact on the sales and it is expected to remain subdued in times to come.
According to the report, sales could be down by as much as 10% this year, another 5% in 2023.
This has increased the availability of houses for sale converting them into a buyers’ market. With more houses available, buyers are feeling at ease with the pricing and availability.
Against this background, let's examine how real estate and property companies are doing on the NZX.
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Goodman Property Trust (NZX:GMT)
GMT is a leading property player in NZ. It launched its Green Bonds recently to raise capital to fund its expansion plans. It also plans to use proceeds of the offer to pay off the existing debt facility. Recently, it also acquired the Sky Television campus for approximately NZ$56 million. This purchase includes adjoining properties at 10 Panorama Road and 16 – 34 Leonard Road with a combined site area of 4.5 hectares.
This purchase complements its existing portfolio and plans to develop a logistics estate that would provide a facility for the entire Auckland area.
On 27 April, the stock was down 1.29% at 2.29, at the time of writing.
Also Read: GMT, PCT, KPG: Will mortgage rate hikes impact these REIT stocks?
Precinct Property New Zealand Limited(NZX:PCT)
PCT develops premium properties across New Zealand. On Tuesday, PCT announced the offer price for the Green Bonds announced earlier. It said that the offer would be NZ$124 million for these fixed-rate six-year bonds. These bonds have been offered to both retail and institutional investors in New Zealand. The Bonds carry an indicative margin of 1.30% to 1.40% per annum over the underlying swap rate, subject to a minimum interest rate of 5% per annum. The margin and interest rate are expected to be set on 29 April 2022 following a book building process. Green Bonds are expected to be quoted on the NZX Debt Market.
On 27 April, the stock was trading down by 0.65% at NZ$1.530, at the time of writing.
There is a confirmed report that the NZ property market was slowing down in terms of sales. It is even a bad time for borrowers as interest rates rise. So, with all this, there are more houses available and it is becoming a buyers’ market. Mortgage rates might create a problem for first-time owners.