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Changes For LVR

May 14, 2014 at 12:23 PM

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The reserve banks controversial measures which forced most home buyers to raise 20 per cent deposits may be coming to an end.  The reason for this is that the restrictions have missed the mark.

April house sales figures show mortgage lending restrictions are hitting the bottom end of the property market the hardest as the number of house sales under $400,000 fell sharply in the past year.  The most affordable homes were worst affected, with a 31 per cent drop in sales for properties worth less than $400,000 - 1151 fewer sales.  Sales of homes worth more than $1 million increased by 14 per cent over the same period.

In a speech on May 9, Reserve Bank deputy governor Grant Spencer said pressures in the housing market were easing gradually and the lending restrictions were achieving their purpose.  "The volume of house sales has dropped considerably across the country, other than in Canterbury, and the slowdown in volume has also been reflected in prices." 

The earliest date for rolling back restrictions was likely to be late in the year.  So with the possible LVR change coming later this year nothing has been done to address the underlining issue which is and under supply.  Supply and demand are the drivers of all markets.  Auckland and Christchurch have supply issue and as a result we see price increasing sharply in those regions.  Why the rest of the country was punished for the big city sky rocketing prices is beyond me. 

The best plan would have been to help first home owners into new houses in new suburbs and help developers with infrastructure to build more properties.  That would be the only way they can address the housing shortage and stop prices going skyward.  This of course will not happen, so expect plenty more capital growth in Auckland over the next couple of years.



Tags: lvr changes of lvr
Category: Auckland Property

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