A boost in housing market activity and an excellent outlook for the dairy sector are providing green shoots as we look ahead. The regions continue to lead the way on New Zealand’s economic recovery, thanks to the strong performance of our agricultural sector. Economists are predicting continuing success for dairy prices: “The stars are aligning for a strong spring.” We’ve had an unusually robust five months in a row of export surpluses.
The property market is now returning to ‘normal patterns’, if you judge it by mortgage activity: “while it might be tempting to see things as ‘quiet’ at the moment, the figures don’t really suggest that.” Property sales in June were up 20.3% compared to June last year, according to REINZ. Deals were being done all over New Zealand as buyers and sellers found their pricing sweet spot, with particularly high activity levels in Gisborne, Southland, Bay of Plenty and Marlborough. Prices were steady overall, but certain regions are outperforming others. House prices are up year-on-year throughout the South Island (excluding only Canterbury) and Hawkes Bay, Waikato and Hawkes Bay.
Looking longer term, ANZ is forecasting three more OCR cuts before February, which would take the OCR to 2.5% and help the housing market recover gradually through 2026. With local inflation a little lower than expected, and global uncertainty starting to settle down, Infometrics just doubled its growth forecast for 2026.
What’s happening at Zagga?
We’ve been seeing evidence of growth here at Zagga, too. Investors will have noticed the uptick in new loan investment opportunities available, with new borrowers around the country.
Demand to fund new loans has remained high with most of our loans continuing to be snapped up in a matter of hours.
Returns for investors have been strong recently, with most sitting around 8% p.a. and the majority of our loans being for 12 months or less.
We’ll continue to assess risk and returns on a loan-by-loan basis, however expect returns to fall within 7% p.a. soon, more in line with market rates (still well above term deposit rates averaging 3.8%).
With Spring just around the corner, we look forward to funding more quality loans, providing solid, risk-mitigated investment opportunities.
