A Commentary On REINZ's August Report
August, a new month and a new report on the property market. As always, the Real Estate Institute of New Zealand (REINZ) has published its monthly report on the property market in New Zealand. This month it has made a bold statement asking for the review of the current lending restrictions, specifically the loan-to-value ratio due to the fall in sales across the country by almost 25% in July compared to July of last year (REINZ, 2017). The restrictions were introduced to cool the market and bring stability to allow more Kiwis the opportunity to purchase a property without having to trade a limb or two. Now, with a decrease in national sales an appeal for a change in restrictions is worth a thought.
Looking at the numbers collected by REINZ, the median price has increased nationwide whilst the properties sold has decreased. Auckland, with its housing shortage and growth in population, has seen a small decrease in its median price. According to their report, Auckland’s small decrease in median price is only a short-term issue due to the housing shortage and growth in population. The previous month has been exceptionally quiet in terms of volume of sales. By reducing the restrictions there would be an opportunity for Kiwis with less deposit (less than 20%) to purchase an owner-occupied home. However, if lending restrictions are lessened more Kiwis will have the ability to purchase a home which would increase the number of people demanding to purchase a home. In a region like Auckland, this would result in an increase in price once more. Currently, LVR restrictions on building new homes, whether for investment or as an owner-occupied property, require a 20% deposit. Stats NZ (2017) has reported an increase of 4.7% for new dwellings at the end of June compared to the year before.
As it stands the LVR restrictions are doing a good job of stabilising the market. Looking ahead, for the interests of our economy and to meet population growths, there could be less restrictions on loans for building new properties. With 2017 being an election year and the property market a talking point, there is much to anticipate as the countdown towards election day gets closer.
Building Consents Issued: June 2017. (n.d.). Retrieved August 11, 2017, from http://www.stats.govt.nz/brows...
Monthly Property Report - 11 August 2017(Rep.). (2017). REINZ.