What impact has the LVR limits had on the market?
The question on many peoples mind is what impact have the most recent (announced late July) LVR limits had on the market.
Weekly tracking of Bank-ordered valuations (which provides a pre-sales measure of market demand) have remained flat compared to activity prior to the LVR announcement in late July.
The latest QV House Price stats show signs of values slowing in Auckland, Hamilton and Tauranga.
Auckland is centred on the quality of stock, with good properties still selling quickly and older stock perhaps going a bit stale as active buyers in the market continually pass them by.
While demand has been hit by the latest round of LVR limits the low interest rate environment still makes borrowing attractive for those able to get the required deposit. And we are still seeing a strong overall inflow of net migration.
The Unitary Plan should start to have an impact with the supply of homes but as with any development/regulatory changes it’s going to take a while for processes to catch up so options for buyers will remain constrained for the time-being.
According to Nick Goodall, Senior Research Analyst, CoreLogic NZ, it's unlikely that values will be heading south any time soon, which will no doubt continue to draw the attention of both the Government and RBNZ so there may be further intervention to come.