Happy New Zealand Music Month everybody! Whether you’re working in the office, lounging in the living room or freezing on a beach somewhere, we hope you have some great Kiwi tunes blaring away.
Real estate news is thrilling enough not to need a soundtrack, but let’s see if we can’t come up with a suitable local song list all the same:
Prices: Cruise Control, or Slippin’ Away?
The latest data from Realestate.co.nz shows it’s largely business as usual.
The mean truncated asking price rose by just 0.5 percent to $447,275. That is still, however, a record high and 6% higher than a year ago.
Meanwhile the number of new listings on the market fell to 10,023, 21.5% less than March and 1.5% down on a year ago. Sellers are happy and confident… there just aren’t all that many of them.
Combine that with low interest rates, leading to high buyer demand, and we have the reason why house prices are pretty high at the moment.
Data released yesterday by the Real Estate Institute of New Zealand seems to back this up. 7104 houses sold made it the busiest April in six years. Again, Auckland and Canterbury take most of the credit, proving again that when it comes to real estate, they’re in their own Private Universe.
Still, living in the city ain’t so bad.
Loan to Value Ratios: System Virtue, or The Male Monster from the Id?
Nearly one third of new loans are for houses with a Loan to Value ratio (i.e. how much of the house price you’re borrowing to buy it) of over 80% – and The Reserve Bank don’t like that very much.
Last week they announced that from 30 September the big major banks (ASB, ANZ, BNZ and Westpac) will have to set aside more capital for these mortgages. That is, the banks must have a bigger buffer in case any of these ‘riskier’ loans go up in Blue Smoke.
The desired outcome, from their point of view, will be higher interest rates and fewer people borrowing.
David Tripe, head of banking studies at Massey University, calls the move a “slap in the face” for first home buyers. With interest rates low it’s a good time for many to get on the property ladder. Higher interest rates, coupled with the need for higher deposits, makes it much harder to stop renting and start buying.
First home buyers are an easy group to punish, but what for? Price wise they’re usually house hunting at the lower end. These loans are Not Given Lightly either – applicants for loans with a high LVR often pay a higher interest rate anyway.
So are the new rules indeed grossly unfair, or will they protect many first timers from drowning in debt? It’s a topic worthy of its own blog post … so stay tuned for that next week.
A Te Awamutu family’s reaction upon finding out how much more they’d need for a house deposit.
Affordable housing: In the Neighbourhood, or Gutter Black?
Some hope for first home buyers who would rather not find themselves Out on the Street.
Last week the Auckland Council and the Government signed up to the Auckland Housing Accord. This acknowledges a lack of houses as the main reason for rapidly rising prices, and aims to achieve “increased housing supply and improved housing affordability in Auckland in the interim period until the Auckland Unitary Plan becomes operative.”
This won’t be before 2016; in the meantime the city needs to be building 13,000 houses a year starting yesterday. Developers need local and central government to come break their Chains and help them out.
The Accord agrees; the consent process will be streamlined (from an average of three years for greenfield developments to six months) in ‘special housing areas’. This will, everyone hopes, lead to 9,000 houses being built in the next year, 13,000 the following year and 17,000 the year after that.
We certainly hope that’s the case. You can read the whole Accord here; it’s ambitious, but a little ambition is exactly what we need.
Greater Hopes? Greater Expectations?
Enough Stuff and Nonsense (and flimsy song references) from us – what do you think? Are prices too high? Are first home buyers being unfairly punished? Does the Accord make you happy? Sing out below or on our Facebook page. And be sure check out nzmusicmonth.co.nz for plenty of news and local gigs info.