Welcome to the first update from Zagga for the new year.
A year of two halves
2024 was a subdued year in the property market, with higher interest rates keeping lending activity low. The result for Zagga (and across the board), as we heard from many investors over the course of the year, was a lower volume of quality loan investment opportunities.
However the mood in New Zealand’s financial markets now is “cautiously optimistic”.
We feel this caution is warranted, with unemployment still rising, more consumer spending needed and plenty of geopolitical uncertainty.
The optimism is also well-warranted – Sub 5% mortgage rates, strong dairy and commodities prices, will all contribute to increased spending.
The housing market remains a buyers’ market, with a multitude of listings and flat prices. There’s no sense of urgency or FOMO (yet), and therefore no major upward pressure on prices. It’s widely expected this recovery will begin in the second half of the year, with modest growth heading into 2026 and beyond.
The combination of lower prices and interest rates, mean property investors and developers will now have confidence to buy property at reduced prices and developers can begin to take advantage of lower rates and an increased lending appetite, with margins starting to increase.
What’s happening at Zagga?
Appetite from our investor base remains incredibly strong for new investment opportunities. Our investors are beginning to assess their options, to bolster returns ahead of term deposits maturing, and facing down the barrel of term deposits sitting around 4.52% on average.
In turn however, to remain competitive for borrowers’, Zagga’s investment returns have also been revised downwards – though still highly favourable, with current average returns expected around 7.5% p.a. – 8.5% p.a. for good quality loans.
The holidays are now behind us. With new opportunities in property investment and construction, and business owners seeking liquidity to invest in growth, Zagga’s credit team are now starting to see an increased volume of loan enquiry.
The team are currently assessing a number of loans, with new opportunities expected on the platform within the week.
While loan enquiry continues to grow, we do expect these loan investments to fund quickly, so please bear with us, while we work to deliver more to you as soon as possible.
Finally, with the new year comes new ideas and we have some exciting projects in the background, which we hope to announce over the next few months.
As always, feel free to get in touch with the team if you have any questions around investing or borrowing.