Harcourts applauds news LVR restrictions may go

Harcourts applauds news LVR restrictions may go

Press Release: Harcourts

9 May 2014

New Zealand’s largest real estate group Harcourts is welcoming the Reserve Bank’s announcement that LVR restrictions may be scrapped by the end of the year.

Harcourts CEO Hayden Duncan says the loan to value restrictions have had most impact in provincial New Zealand, where the market has never been overheated.

In Auckland and Christchurch, rising prices are a direct result of high demand and low supply. This means the restrictions have had little effect on overall prices. Instead they have made it temporarily more difficult for first home buyers to break into the property market.

“As our population increases, LVR restrictions will become increasingly ineffectual in Auckland. In Christchurch the rebuild is a long way from catching up with demand for housing. The restrictions have only ever been intended as a temporary measure, and I would applaud moves by the Reserve Bank to end them,” Hayden Duncan says.

According to Harcourts most recent figures, the average house in New Zealand now sells for $500,852, which is a record high, up 12% on the same time last year and 13% on September, the month LVR restrictions were introduced.

In Auckland the average sales price now sits at a record high of $700,793. This is up 11% on the same time last year. It is also a 13.5% increase on September 2013 figures.

In Christchurch the average selling price for a residential property is $476,695. This is fairly constant with the same time last year, however April 2013 was a record setting month. It is also an 11.8% increase on September 2013 figures.

However, Hayden Duncan says as the average price is affected by sales at the upper end of the market, we cannot completely discount the effect LVR restrictions have had.

“Our sales consultants reported there was a cooling off in interest from first home buyers in Auckland and Christchurch in the first several months of the restrictions being in place. However, with such high demand overall average prices have continued to rise.

“First home buyers are now also coming back into the market and are meeting the 20% deposit requirements creatively, through options such as second tier lenders and family borrowing.

“I congratulate the Reserve Bank for recognising the LVR restrictions are coming to the end of their usefulness.”

ENDS

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