There have been many reports in the media about the performance of the property market — more opinion than fact. Over the years you’ve been reading my updates, you know me well enough to know that I like the facts.
There are some key drivers in any property market: employment levels, net migration, crowding, property sale volumes, construction, affordability, rents, and number of days to sell property to name a few. All of these remain at relatively stable levels.
The first home buyer market is certainly buoyant (new mortgage registrations rose from 24.8% to 26.4% last month) with lenders easing up on restrictions along with attractive interest rates — with no predictions of tightening anytime soon.
Changes to LVR's
The RBNZ Financial Stability Report released on Wednesday the RB noted the slowing in mortgage lending growth and house price inflation. In response they have cut the minimum deposit requirement for investors from 35% to 30% (having cut it from 40% a year ago). And banks may now have up to 20% of their lending to owner occupiers at less than 20% deposit. This had been 15% from the earlier 10% percentage of volume limit.
Will these changes affect property values?
Not really. At least, they certainly won’t lead to large rises in house prices, but the changes should bring further stability to the market. Remember when they imposed the changes as the market was rising? They were never to bring house prices down, they were just to slow the growth and stabilise the market. Now it’s the reverse.
The sellers market has passed (2 years ago), but the balanced market environment we are presented with is a healthy one. Values remain relatively stable along with stock levels and sales volumes. I see this property climate remaining similar for a few years yet.
These are the suburbs which have had the most dramatic price increases the Auckland over the past 18 months.
Milford topped the list while Te Atatu Peninsula, Te Atatu South, Manurewa, Papatoetoe and Glen Eden have all stormed into the top 20. Loan Market mortgage adviser Bruce Patten said he certainly wouldn't want to see us have another year at this level, otherwise we will be putting ourselves under significant risk that we are in a real bubble.
Peter Thompson, managing director of Barfoot & Thompson is quoted as saying ''...Don't overprice your property. People won't just keep paying high dollar, prices have levelled off. If people do want to sell they'll have to be in the market realistically and not looking to make that extra two or three hundred grand that some of them have over the last two to three months."
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