Major real estate firm says first-time buyers and lenders are finding ways around lending limits

Major real estate firm says first-time buyers and lenders are finding ways around lending limits

First home buyers "are becoming wise" to the alternatives available without having a 20% deposit to buy a house, according to real estate firm Harcourts.

Meanwhile another major firm, Ray White Group, says that it achieved its largest single monthly rise in average house prices for five years in November because of a big drop-off in the number of lower-priced houses sold.

In Harcourt's December "Northern Region MarketWatch" chief executive Hayden Duncan said that the average price for Harcourts' sales in the region (including Auckland , Whangarei and Kaitaia) had again increased, reaching a new high of $659,835, which was some 14% higher than the figure for the same month a year ago.

Duncan said that the market took a "slight pause" at the RBNZ's introduction of "speed limits" on high loan-to-value lending on October 1.

However, since then, he said buyers had "wised to the alternatives available without a 20% deposit and are buying in good numbers". He didn't go into specifics on what the "alternatives" were.

"Lenders have also adapted and are picking up any gaps possibly left by some first home buyers," he said.

Auckland's biggest real estate firm Barfoot & Thompson reported that in November its median price of houses surged by 5.3% to a new record of $621,400, while the average price rose by 3.2% over that for October to a new record $684,646.

"If the Reserve Bank restrictions on mortgage lending are to have an impact on the Auckland housing market, they are yet to show up in housing activity or sales prices," B&T managing director Peter Thompson said.

Ray White Group said in its nationwide wrap-up of November sales that the group increased its sales by 8% on last year's November result, but the sales were down by 5% compared with the October results.

It said, however, from what it was seeing the recent introduction of the LVR changes put into place by the RBNZ has had an impact on the ability of first home buyers to purchase property.

"Ray White has also seen investors holding off from purchasing while they realign their borrowing capacities. This has had a direct influence on the average sale price, which has lifted to above $490,000 and is an 8% rise for November – the largest single rise of property prices in the last five years.

"The rise is directly attributed to the consistency of the middle and upper markets and the fall off in the first home buyer and investment market," the firm said.

Ray White's chief executive Carey Smith said that  while the sales for November could easily be seen as being consistent; there had been a definite drop away of first home buyers and investors in the market.

"This has meant sale prices have increased however the number of properties available on the market has also increased.

"This is a rare combination that means we may see an over supply of lower priced property given that first home buyers and investors are at at least half the level of this time last year."

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Using averages (and even medians)  is extremely dangerous, and the headline implies that the LTVR rules are not working because the average or median sales prices are increasing .
But in the copy , Smith says there has been a definite drop in the sales to FHB and Investors .
What he is saying is that houses in the affordable space are not moving .
Of course if your sales are all in the "expensive"  brackets it increases both your average and the median sale price
Maybe the LTVR rules are only really smacking the lower priced propertiy sales ?
The sluggish lower end would have the effect of increasing the "AVERAGE " Price of the higher priced sales ?

You may want to look at the other news, new loan approval hits highest since LVR restriction, from both number and volume's perspective.
 
Not that LVR is not affecting the FHB, the gap will be quickly filled in by Investors / Offshore Buyers, as the Interest rate is all time low. Vendors are unlikely going to bargain much as they can hold off the process relatively easily since the interest rate is low.

If this really is the case, it's only a matter of time until it spreads to the mid and then higher end properties.
 
As those trading up to mid can't sell their low-end property, sales of mid properties will drop off.
As those considering what to buy, compare low to mid properties, less people will justify borrowing enough for a mid-level property when the price gap between low and mid opens up.

Well, the RBNZ will just have to sort the chaff from the seed and move from a 20% deposit restriction to a 50% level, or even better why can't the punters just use all their own capital? That will make the banks a much safer bet, since the citizens are about to be called upon to rescue Chorus and they already suffer from a national if not an individual funding deficit.

Brilliant...even better close the banks, shut the gates on immigration and internal migration put up a sign "Auckland is Closed" Then prices will drop, you'll pick up some of those bargains....and then, this gets really clever, you reopen again, "Auckland is Open'.

I'm a very average kiwi Factboy. No suffering going on at my house. It is in We$t Auckland though...

The word "wise" is somewhat misleading.
Finding dodgy ways to get around paying for inflated property prices for low quality buildings is far from wise.

Yes, indeed - the article reads as if one is peeking into the exploits of fraudsters rather than those seeking to legitimately obtain shelter.

"Ray White has also seen investors holding off from purchasing while they realign their borrowing capacities. This has had a direct influence on the average sale price, which has lifted to above $490,000 and is an 8% rise for November – the largest single rise of property prices in the last five years.
"The rise is directly attributed to the consistency of the middle and upper markets and the fall off in the first home buyer and investment market," the firm said."

Gasp  - who could have expected or predicted THAT......

And yet we see another fraudulent real estate agent in the paper today. Testimony to our less than savoury property industry; shoddy buildings (leaky..) and greedy banks pumping lots of overseas money into our market beyond sustainability.