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Media release
17 October 2008
Global credit crunch hits home
The global credit crisis is having a trickle-down effect on the real estate market in Taupo, already in a downturn of
its own, an experienced Taupo realtor says.
First National Taupo principal Brent Howie says recent tightening in the credit market will stop many prospective first
home buyers "in their tracks".
"Our prices are reasonably high for the first home buyer here in Taupo. This year there's only been two houses sold for
under $150,000, or 20 under $200,000 this year."
On top of the scarcity of property in the low-end, banks were tightening. Now first time buyers had to have 20% deposit,
be able to prove they saved that deposit – not have it gifted by parents - and have evidence of ongoing income to be
able to service the debt.
"There are very few houses available, and the banks want $30,000 to $40,000 deposit, which is scary compared to what it
was two, three, four years ago," Mr Howie says.
"It does have an effect on the overall market, because the first home buyers are the people who become the second home
buyers and go up into the $300,000 bracket and then the $350,000."
As a result of the higher prices of property in Taupo, "we've got a more mature owner", many of whom were quite happy in
their homes, and prepared to sit and wait to see what happens to prices.
That would mean a lag in house sales in the higher prices, too.
Statistics for September, just out, showed a dismal 26 house sales in the whole of Taupo for the month. While Mr Howie
is happy with his company’s share of those, and notes more than
half of the sales were over $400,000, he said sales were down more than 50% on September 2006, and a third of the sales
for the same month in 2003.
The same trend was evident in the August statistics, which were 50 sales in 2007 and only 30 this year. Median house
price was remaining steady at around $360,000, but the average was now below rateable values in most cases, he said.
On the plus side for sellers, sales were still being made provided the vendors were motivated and priced their home
correctly.
First National Real Estate General Manager John Stewart said there could be some relief for first home buyers through
the Government’s ‘Welcome Home’ no-deposit home loan scheme if conditions could be met, including being able to find a
cheap enough house.
Another bright spot in the current market was for those wanting to upgrade.
“Some have come to realise that in the current market where many vendors are lowering expectations, the difference
between two homes for those wanting to upgrade is actually less than a year ago.”
ENDS