Blog 15
Tamsin Parkers article published by The
New Zealand Herald forecast how the LVR restriction rules that were implemented
in Oct 2013 maybe removed by the end of the year, this is because pressure in
the housing market is decreasing. House sales volumes have dropped throughout
New Zealand apart from in the Canterbury region.
If the LVR restrictions are removed
inflation might increase by 2.5% however in the short term have had the
intended purposes required, as planned by The Reserve Bank of New Zealand. A
chief advisor mentioned that the property market is less vulnerable so banks
are more inclined to lend money to those with a high risk.
The earliest date that the reserve bank
would look at removing the restrictions would be the end of 2014 and would only
do so provided that they were confident that the property market would respond
to the increase in interest rates. The RBNZ intention was to remove these
restrictions end of 14/ early 15 as expected (Leung). There was some leniance
for banks to increase their restricted lending "given the share of new
lending came in at 5.6% for the first two quarters" this is well under the
10% margin (Leung).
The discussions as per the loan
restrictions in a meeting with Dominick Stephens a employee of Westpac said
that there was a very sure answer of to questions regarding the LVR and the
limits. If the house market took off again this could mean the restriction rule
will push out into 2015, however are it very clear this was unlikely to happen
(Stephens). The Reserve Bank made a statement that the OCR (official cash rate
was unlikely to increase by such a high rate.
Floating mortgage rates were predicted
to be around 7-8% which is indicative of the previous 20 years in New Zealand,
economists predicted that they could reach this high by the end of 2014.
Interest rates were unpredictable as to whether they will rise and to what
extent and this could be all caused by what is happening in the property market
(Stephens).
Main focus point featured in the
article: LVR restriction might go by the end of the year as the market is
become more stable.
The article published by the New Zealand
Herald relates to Welly real- estate as states how the LVR restrictions may be
removed and this means that the market has an increasing stability rate and
first time home buyers maybe able to enter back into the lower end scale of the
market.
Advising Welly Real estate: If the market for housing is
slowly becoming more stable this may give Welly Real Estate the opportunity to
expand on particular housing right throughout the market from million dollar
mansions right down to first homes. This will expand the business and although
the sale of a house for a property for those of a first time home would be a
lot less than that of the higher scale this would in turn mean that a less
qualified professional would be needed. I.e. less salary/wages.
Works Cited
Parker, T. "LVR rules
may go by year end". New Zealand Herald. 09 May.
2014. http://www.nzherald.co.nz/residential-property/news/article.cfm?c_id=76&objectid=11252242.
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
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