If you’re writing on today’s announcement from the Reserve Bank of New Zealand to leave the LVR restrictions at current levels, please consider the following comment from Bindi Norwell, Chief Executive at the Real Estate Institute of New Zealand (REINZ).
“Today’s announcement from the Reserve Bank of New Zealand to keep LVRs at their current level was not surprising. All the data we’ve analysed over the past 12 months has shown that house prices have risen significantly across most parts of the country. In many towns and cities record median prices are being recorded, so to ease restrictions could create an uplift in the market that would be unsustainable in the long term.
“Additionally, all the data points to this uplift in prices continuing, with predictions of around 4% house price rises per annum for the next few years. A stable market is good for everyone, and we think keeping LVRs in their current position is a prudent approach by the Reserve Bank,” continues Norwell.
“While lending to first time buyers is up on the same time last year (lending increased 12.2% when comparing the first 9 months of 2019 to the first 9 months of 2018), there is still an argument that saving the 20% deposit is difficult for many people looking to get in to the property market and therefore we would like to see first time buyers considered in the future. For example, Auckland has a median house price of $868,000 which requires a 20% deposit of $173,600. This is out of reach for many households and so some easing of this requirement would be welcomed,” she concludes.