Blog 1
Anne Gibson’s article released by the NZ
Herald goes into significant detail about how the new lending restrictions
brought into regulation on October 2013 are going to be of impact in the
future. With the new tighter lending restrictions this means; "Banks will
be required to restrict new residential mortgage lending at LVR’s of over 80
percent (deposit of less than 20 percent) to no more than 10 percent of the
dollar value of their new residential mortgage lending" (Reserve Bank
of New Zealand). The article forecasts the effect of prices rising further
despite it being harder for home buyers to buy properties or invest into the
property market.
The LVR restrictions have put an effect
on demand but could potentially have fled off sellers as well;
as listings are continuously dropping this keeps the housing market tight
whilst house prices still increase especially in Auckland's
property market (Smith).
An economist stated that
as interest rates rise over the year this would then have a flow on effect
with price inflation to the property market and would ease over 2014. As
property listings drop continuously in Auckland and Christchurch the low levels
of supply versus high levels of demand will take years to even out,
however construction that is taking place in these areas is growing
rapidly (Smith). National marketing manager Paul McKenzie stated that
buyers would be affected most as prices will be increasing, however listing
numbers will be decreasing (McKenzie).
The LVR restrictions that were put in
place did not have the attended effect as first time home buyers were getting
around the 20% deposit restriction through other means of
borrowing(Duncan).
Main focus point featured in the article:
LVR restrictions implemented in 2013 having an effect on lending and being able
to get into the property market.
The article released by NZ Herald
relates to Welly Real-Estate as it forecasts how the lower end of the scale in
terms of the property market has been affected by the LVR restrictions and how
this affects first time homebuyers. The LVR restrictions are a branch in the
market under Macroeconomics that deals with the performance, structure and
behavior of the market.
Advice for the company is relating to
this article because effectively the LVR restrictions will have a
huge impact on first time home buyers, I would advise the company to focus more
on the higher valued/priced properties as the chances that those properties
will sell is far greater to that of the lower end.
Work cited:
Smith, D. "House prices surge in
spite of loan restrictions". Web. March 10. 2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.
Duncan, H. "House prices surge
in spite of loan restrictions". Web. March 10.
2014. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11213979.
Reserve Bank of New Zealand. "Loan
to valure ratio restrictions". Web. March 10. 2014. http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html
How does this article relate to and/or impact Welly Real-estate? Is the same thing happening in other regions of New Zealand? What are the trends that are happening in the whole of New Zealand? How do Auckland housing prices impact Welly Real-estate? This is some food for thought. Consider how this impacts the company you are advising.
ReplyDeleteThe article relates to Welly Real-estate because it is talking about the new Loan Restrictions that were implemented late last year which is something that will fall through into the future http://www.rbnz.govt.nz/financial_stability/macro-prudential_policy/5393159.html. With the new restrictions being put into place we would expect that because it is harder for say first time home buyers to be able to take out a mortgage as they have to have a 20% deposit. With this being the case we would expect the lower end of the scale in the housing market to be struggling due to the demand of people buying these houses going down however what we are seeing throughout the whole country is house prices increasing still and people getting around this restriction. Although this article is based towards Auckland it also relates to the whole country as this is happening throughout NZ and Welly Real-estate is somewhere in NZ (unknown).
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ReplyDeletehttp://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11211035
ReplyDeleteThe above article relates to loan restrictions and gives evidence and relation to my first initial article