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Ōtautahi - the city bucking the national trends
Currently, the pull is strong to the Garden City and it may be due in part to the push from other main centres and the overall economic state of play. The cost of living and interest rates are really starting to bite and it's presenting some tough ultimatums for people living throughout the country. It used to be that just getting on the property ladder was hard in cities such as Auckland and Wellington but now staying on that same property ladder is getting even harder.
Interest rates, OCR and Cost of Living - the neverending rhetoric of 2023
This year will see lots of household debt rolling off 2-3% interest loans onto 5-6% home loans. Add inflation and the buzz sentence of the year ‘cost of living crisis’ and we’ll start to see some predictable chaos in the market. The OCR (which should stand for Obviously Constantly Rising) is on an upward trajectory and even with recent flooding events in the North Island are likely to mean it’ll continue towards it’s expected peak of 5.5% later in the year. Homeowners equity positions countrywide have shifted and if you timed it wrong, buying high and facing selling lower - we sympathise as its an awful position to be in. It shows that the property market isn't a game to be played short term, in the long term we will see those values come back but for now it remains tough, tough times.
While we believe Auckland and Wellington and all other areas are great places to live, we recognise the obvious benefits of trading location for economic security and potentially prosperity during these tough times. As a company, we still find the price disparity from city to city quite baffling. If there was a huge trade-off in the standard of living or climate, or the economic opportunities, we’d get it. But there just isn’t!
Two of Rosefern Homes Director’s are from England, one from the North and one from the South. In England this scenario is flipped upside down - the North is less populated and more affordable (if a little bleaker in weather terms and economic opportunity) and the South is more prosperous. Yet the behaviour is the same. Job opportunities from London attract Northerners - and they travel for the big bucks (or big Pounds I should say) but the cost of simply living in a big city is vast and lifestyle sacrifices have to be made. Commutes, vehicle ownership and renting an apartment or room all come at significant outlay. Big city, bright lights are potentially attractive to young people but reality can be harsh on the purse strings and future potential.
Auckland and Wellington are known for their higher cost of living and overly expensive property prices, making it difficult for many people initially to get on the property ladder and currently to stay on that property ladder. Cost of ownership is huge and with prices falling in certain areas the cost of paying down the interest component of a sizeable mortgage is unenviable and with a lack of upside in end value. Christchurch however is bucking that trend.
