Cash rate fresh hope for home buyers

First time home buyer Jureen Allen, 24, hopes owning a home will be easier with this week's expected drop in interest rates. PHOTO/ STEPHEN PARKER

Rotorua home buyers and real estate agents are welcoming an expected drop in interest rates, which could make it easier for locals to get on the property ladder.

The Reserve Bank of New Zealand is expected to cut the Official Cash Rate (OCR) tomorrow, which is set to lower home-loan interest rates.

That's good news for people such as first-time buyers Jureen and Scott Allen, who moved to Rotorua from Palmerston North three months ago for Mr Allen's work. Mrs Allen said they were looking to buy a three-bedroom house in Ngongotaha.

"When you're paying someone else's mortgage, you might as well pay your own. I think [the interest rate drop] is really good. The market out there is not friendly, really difficult for home owners and buyers, so it's tricky but now that they're coming it makes it a little bit easier to own a home and do what you want with it. Really happy it's coming down," Mrs Allen said.

"You can get your capital, you can upgrade, it just makes it less daunting buying your first home."

Real Estate Institute of New Zealand Rotorua district forum leader Ian McDowell, of McDowell Professionals, said a drop would continue the sales momentum they were already seeing in the market.

"We're finding more people are coming to our open homes. One of our sales people had six open homes on the weekend and 29 groups come through; going back six months ago, we might have only had three or four groups so this is quite big movement. [Rotorua] has had sales over 100 per month for the last six months for both houses and sections, so it's all very promising and I'm sure there will be more interest with the lower interest rates."

Ross Stanway, chief executive of Realty Services, which operates Eves and Bayleys Real Estate, said the drop would bring more people into the buying market.

"Ideally, to keep up with demand, it would also spur on more home owners who had been considering selling to make the move when they saw a busy buyers' market."

Mortgage brokers are also preparing for an increase in activity. Registered financial advisor David Hart, of The Mortgage Supply Co, said he was expecting a drop in the floating interest rate before any changes to the long-term fixed rate.

"This will probably fuel the market a bit more, we've certainly seen more interest from investors compared to four months ago. There's also been an increase in first-home buyers as well, mainly because of the Government relaxing [the Welcome Home Loans] terms, which has had an impact on the market, along with changes with Kiwisaver to what people can pull out."

Perry Bell, of Perry Bell Insurance and Mortgages in Rotorua, said now was an ideal time to buy.

"We would hope to see more first-time buyers because it's coming to the point that it's well worth buying rather than renting. A lot of people do want to buy but are struggling because of existing debt and not enough deposit."

Property investors are also keen to buy into Rotorua as Auckland house prices soar, according to the president of the Rotorua Property Investors Association, Debbie Van den Broek.

"In the last seven months a lot more people are buying here to invest, because Rotorua prices are seen as good value, and there is a cash-flow positive return on any investments in Rotorua."

Mrs Van den Broek said she also saw more first-time investors emerging in Rotorua.

"Here you invest money and break even. It's getting a foot on the property ladder without costing you."