Real estate boss: Financing affecting house sales

Real estate boss: Financing affecting house sales

“The real estate industry is seeing an increasing number of deals falling over simply because of finance,” says Geoff Barnett, National Manager of Century 21 New Zealand.

Mr Barnett says a new wave of lending caution from the country’s retail banks and financial institutions is affecting some settlements, and in some cases after buyers thought they had pre-approved finance all sorted.

“When it gets down to the nitty gritty of a sale, more lenders are then insisting on getting the likes of valuations done and giving much closer scrutiny to mortgage serviceability. It’s often when banks are finalising their lending assessment on a specific property, that some buyers are then told they no longer meet the lending criteria.

“It’s heart-breaking for buyers, vendors and agents alike when finance falls over but given some international uncertainty and a levelling New Zealand real estate market, heightened caution by our banks and other lenders is totally understandable.”

Mr Barnett says news of a Government in place will be a timely boost for overall certainty, stability and confidence going into summer.

“During the election period and the subsequent coalition negotiations the economy effectively hit pause as everyone expected. When a new Government’s in place and a policy and project programme well signalled, we’re again anticipating this summer to be steady at the very least.”

He says he doesn’t expect interest rates to rise in any dramatic fashion over the next 12 months, and with housing demand still outstripping supply, realistic vendors prepared to meet the market will still sell their properties at good prices.

“Industry-wide we’re seeing listings down, auction clearance rates down, and sales times extending, but we’re also seeing willing buyers and vendors negotiating fair prices both parties are happy with. In fact, a lot of lower-valued properties are holding up really well.

“It’s actually a good time to sell. There’s not as much stock on the market and so any new listings will get noticed more by plenty of buyers who are still out there.”

Longer term, Mr Barnett believes the New Zealand real estate market is entering a consolidation period while incomes start to catch-up somewhat to property prices.

“Some want to talk down the future of real estate but what we’re now witnessing is a more normalised market showing more realism and genuine sustainability than the crazy days of a couple of years back.

“Thanks to population growth, solid economic forecasts and confidence, robust Government finances, low interest rates, and a range of targeted housing measures rolled out in recent years, Kiwis have nothing to fear when it comes to real estate. In the first instance this coming summer is set to hold up pretty well,” says Mr Barnett.

www.century21.co.nz

Century 21 is a proud sponsor of the Phoenix Football Club.

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