Tag Archives: First-home buyers

What you need to know about the government’s KiwiSaver changes

KiwiSaver

The government’s KiwiSaver support package for first home buyers came into effect on 1 April. It’s intended that this will help 90,000 lower and middle income people into home ownership over the next five years. As house prices continue to increase relative to incomes, these changes will go some way into keeping the Kiwi dream of home ownership alive. Continue reading

August stats show steady growth

August 2013 StatsThe stats from REINZ present a picture of an active market here in Christchurch. The median price of $374,000 is up a modest 2.6% on this time last year, although the institute’s house price index (which adjusts for different types of homes selling) found city prices rose 6.1% in a year. Canterbury homes are also among the fastest selling with an average list-to-sell period of 28 days, with the national average at 34.

It’s apparent that this strengthening market is being primarily driven by investors and first-home buyers competing for similar types of properties. Investors appear to be keen to capitalise on the frenzy in the rental market, whilst first-home buyers are keen to secure a property quickly before the Reserve Bank’s LVR restrictions come into force.

It has been my own experience that these relatively modest properties which appeal to both groups are being snapped up very quickly. One of my recent listings at 202 Beach Road, your classic three-bedroom, one bathroom, Summerhill stone home sold above asking price after only four days on the market – and it was TC3.

Links:
Liz McDonald (The Press): ‘Scramble even for ‘very untidy’ homes
REINZ: Sales and prices rising in August real estate market
NZ Herald: Sales growth slows, property prices up $5,000
David Hargreaves (Interest.co.nz): House market ‘will cool off’, say Westpac economists
BNZ-REINZ Residential Market Survey: No good news for buyers

Tightening up on lending

Mortgage-FormFrom Stuff.co.nz:

One in every two to three first-home buyers could be shut out of the housing market as the Reserve Bank forges ahead with controversial restrictions on home loans. Banking sources say the central bank will announce new rules within the week that will rein in riskier mortgage lending to 12 per cent of new loans.

The changes will dramatically reduce the amount of high loan-to-value (LVR) loans that the banks are writing, making it much harder to get a mortgage with a deposit of less than 20 per cent. In theory, the new regime could strip close to $2 billion out of the loan market in a year, equal to more than 4000 homes at average prices.

I say let’s ask ourselves the following questions:

  • Is it so bad if the lending criteria are tightened?
  • Have we become accustomed to purchasing property with skimpy deposits?
  • In this material age have we lost sight of “no pain, no gain”?
  • Is living with debt the accepted thing?

Call me old school, conservative or irrelevant but I fully support the reining in of “high risk/low equity” lending. What was wrong with the old days when a minimum deposit of 20% was required? And yes we worked, scraped and saved to get it but somehow we used to do it.

Yes, sure it is going to hurt by raising the bar of lending, but wherever a new level is set it will always be too high for some. Once established, the rules become the new accepted norm and form the baseline for what is acceptable. Look at what the no tolerance drink driving rules has done for our teens. It has brought back some good old black and white rules and I think the new lending criteria will do the same in the long run.

If you really want something bad enough, you will always find a way of getting it.