Propertyscouts Auckland

Supply and Demand is still the Bottom Line for Housing - 27th Nov 2017

According to the latest sales figures from the Real Estate Institute of New Zealand (REINZ), released last week, sales volumes in the Auckland region are still dropping. Volumes decreased 0.9% compared to September 2017, with large falls in sales numbers in Papakura District, Manukau City and Waitakere City (12% - 19% decreases). Compared to October 2016 sales fell 21% with volumes decreasing all over the city. CEO Bindi Norwell commented: "It’s clear that the volume of properties sold across the country is still significantly lower than it was this time last year. Therefore, we welcome the Reserve Bank’s comments last week that they will make an announcement later this month around reviewing the restrictions and the criteria that they would adopt for the removal of LVRs."

Tony Alexander, Chief Economist at the Bank of New Zealand, discussed this issue in his weekly overview last Thursday. Tony wrote "There is an increasing chance the Reserve Bank (RB) will ease up on the (LVR) rules because they have been surprised at how quickly the housing market has pulled back." Tony continues to say that the RB will be cautious as they do not want a new surge. "The 40% introduced last year worked then but may be too much now, so if they reduce the proportion, it will only be to find the new level where things become stable, not a huge adjustment." Secondly, banks have tightened their lending rules over and above what was required by the RB and it is unlikely these rules will be eased too much to allow a new rash of lending to investors. Thirdly, the fear of missing out has disappeared from the market. People have stopped buying anything they can get their hand on to benefit from soaring house prices. Finally, foreign buyers are to be banned.

Also, the new Government have said they will increase the bright line test from two years to five years to target people who buy houses looking to make a quick capital gain.

All these measures to remove speculators and foreign buyers from the market should, theoretically, make it easier to buy a home to live in, as long as there are houses available to buy at prices that buyers are prepared to pay.

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