THE PROPERTY MARKET

The property market is always a hot topic. High interest rates and a stagnant economy have seen the property market slow down with little lost or gained in property prices over the last few months.

With interest rates finally coming down and more forecast to come, are we going to see the property market heat up?

With brightline relief now available to property owners and potential investors alike, it seems like the perfect time to provide a breakdown of recent events and how you can prepare yourself to make an offer on your first home or a new investment.

Interest rates

Earlier this month the Reserve Bank cut the official cash rate from 5.5% to 5.25%. This has seen banks reduce their mortgage rates across the board to include floating and fixed term rates, to capture more market share.

ASB have cut their rates across the board, including their 18-month and 24-month fixed rates to 5.99% and 5.89% p.a respectively, with ANZ also making similar cuts. One Roof has published a useful article with the latest on interest rate cuts from NZ’s major banks.

There also appears to be some positive news for first home buyers seeking to purchase with less than the standard 20% deposit. BNZ has cut its rates for low equity buyers and other banks are likely to follow suit.

With interest rates finally returning to below 6% p.a. and future cuts likely to follow later this year, it is a great time to purchase. For those soon to come off fixed rates it is also an exciting time to refinance. If you are looking into refinancing or making a purchase, we would strongly recommend using a mortgage broker to ensure you are getting the best rates. You can find our handy blog on refinancing as well as a list of brokers we would recommend here.

For readers that are new to the property market or are simply looking for a refresher on how to make an offer on a property, including at what point in the process you should seek advice, you can also find our first home buyer’s guide here.

Bright-line changes

Simply put, brightline sets a period in which you will incur tax liability on any profit you make when you sell a residential property during the “brightline period.” There are exceptions to the rule, for example if the property is your main home, it is exempt from the brightline (with some exceptions).

As many are aware, the brightline changes promised by the current government are in full swing. Anyone that purchases a residential property after 1 July 2024 will now only be subject to a 2-year brightline period.

The two-year period also applies for current homeowners. However, it is important that vendors are aware that for brightline purposes the end date is calculated as the date an agreement was entered into, and not the date the property is transferred. That means that for sale contracts signed and dated before 1 July 2024, the previous brightline period will still apply (5 years for new builds and 10 years for existing properties purchased on or after 27 March 2021). The start date of the brightline is when the property is registered in the purchaser’s name, which is usually the date of settlement which means all purchases from 1 July 2024 onwards are subject to the shorter period.

The team at Wakefield’s is incredibly experienced in assisting experienced investors, first home buyers and everyone in between in getting their purchases across the line. If you need assistance with your conveyancing, give the friendly team at Wakefield’s a call on 04 970 3600 or email info@wakefieldslaw.com.

• Tom Speight (Solicitor)