PHOTO: NZ property prices
News of the Reserve Bank’s firmer LVR restrictions will see rapidly rising house prices ease somewhat this autumn, says one real estate boss.
“We all know last year’s nearly 20% rise in house prices is not sustainable. Good on the Reserve Bank for confirming it’s set to cool the jets in a manageable way. What this also confirms is that those Kiwis looking at selling their homes should act now,” says Derryn Mayne, Owner of Century 21 New Zealand.
From 1 March, the Reserve Bank’s reinstated loan-to-value ratios (LVRs) regime will see 20% minimum deposit requirements for most owner-occupiers and 30% for property investors. However, from 1 May, 40% deposits will be required from 95% of investors.
Ms Mayne says combined with major tenancy law changes taking effect this week, many Kiwis will pull back from buying a residential investment property.
“With property investors now making up about 27% of all buyers, putting the brakes on them makes some sense. Putting the brakes on many first-home buyers will be hard on young Kiwis though. In Auckland, a mandatory 20% deposit could mean $200,000 needed up front. Sadly, that could mark the end of the road for many prospective first-home buyers, unless the Government has a plan for them,” she says.
The Century 21 leader notes another Reserve Bank policy – the mortgage holiday scheme – will expire on 31 March. This will add pressure to tens of thousands of Kiwi families with a rise in exit and mortgagee sales inevitable.
Finance Minister Grant Robertson has made it clear the Government will take bold action when it comes to housing – to be unveiled in May’s Budget. ‘The market has moved quickly and rapidly in a way that is not sustainable. We have to confront some tough decisions, and we will do that,’ Mr Robertson told a business breakfast this morning.
“We await with interest, as will increasingly frustrated first-home buyers. Regardless, autumn is lining up to be the season when New Zealand’s real estate starts returning to more sustainable track. Vendors need to grab those house hunters now,” says Derryn Mayne.
ENDS
Contact: Derryn Mayne – Century 21 New Zealand – (021) 399-431
