Blog 14
Jamie Mortons article published by the New Zealand herald forecasts readers as to how first time home buyers struggling to purchase into the property market shouldn't get there hopes up any time soon as bank lending may be "lifted" says banks and real estate agents. Grant Spencer from The Reserve Bank said the LVR restrictions implemented last year, that stated those with less than a 20% deposit would be turned away however these restrictions may be gone by the end of the year (Spencer).
Jamie Mortons article published by the New Zealand herald forecasts readers as to how first time home buyers struggling to purchase into the property market shouldn't get there hopes up any time soon as bank lending may be "lifted" says banks and real estate agents. Grant Spencer from The Reserve Bank said the LVR restrictions implemented last year, that stated those with less than a 20% deposit would be turned away however these restrictions may be gone by the end of the year (Spencer).
"Pressures in the housing market
were starting to ease" (Spencer).
The number of house sales has dropped
everywhere in New Zealand apart from the Canterbury district post earthquakes.
If the LVR restrictions are fled then inflation could rise by 2.5%. However
banks are less inclined to be frightened away by potential credit losses.
Associate Professor David Tripe said the
earliest The Reserve Bank of New Zealand will be looking at removing the LVR
restrictions is late 2014. "Banks may continue to be somewhat
cautious in their lending - one of the things about those rules having been in
place is they have cemented a culture of caution. But what has also happened is
the banks, in most cases, have not had enough demand for the high LVR loans to
be able to even get up to the percentage cap" (Tripe). The LVR restriction
was said to be removed in the late 2014/ early 2015 bracket (Leung).
However the LVR restrictions will only be removed if the Reserve Bank of New
Zealand is confident that the housing market is on a steady decline, and
interest rates will be of expected to balance property pricing.
Professionals in the property industry
have said that the LVR restrictions have missed the intended purpose somewhat
as they have only really effected the lower end of the scale where as those in
the higher end of the scale are prepared to pay (O'Sullivan).
Main focus point featured in the
article: If LVR restrictions are removed this could be of cause to inflation
rising to by 2.5%.
The article released by the New Zealand
Herald relates to Welly Real estate as it implies instability in the market if
the LVR restrictions were to be removed meaning that if inflation occurs this
effects mortgage rates and would in turn affect house sales.
Advising Welly Real estate on the
current situation based around this article would be to again focus on the
property sales on the higher scaled end. Even though housing prices and LVR
restrictions are easing, the effect is predominately on the lower end, so
focusing on the higher scaled end would deem a safe option for Welly Real
Estate in terms of growth for the business.
Works Cited:
Morton, J. "First-home
hopefuls cautioned". New Zealand Herald. 10 May.
2014. http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11252587.
Article. A4.
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
No comments:
Post a Comment