“February is likely to be the best month to sell your house this year, and so those contemplating listing a property
would be wiser to act sooner rather than later,” says Derryn Mayne, Owner of Century 21 New Zealand.
Her comments come as the Reserve Bank reviews public consultation on what should happen to loan-to-value ratios (LVRs),
which were removed temporarily last year after the first Covid-19 lockdown. Lower deposit requirements have since
contributed to a surge in buyers and house prices, but their end is in sight.
The Reserve Bank will this month announce its new LVR regime – set to take effect from 1 March. Pundits predict it will
see 20% minimum deposit requirements for owner-occupiers and possibly even 40% for property investors.
The Century 21 leader says with property investors now making up about 27% of all buyers, putting the brakes on them
will have a demonstrable impact as has been seen in the past.
“Five years ago when property investors were hit with a 40% deposit requirement, it took many of them out of the market
and helped cool the jets somewhat. Combined with major tenancy law changes taking effect on 11 February, I think we’ll
soon see many Kiwis pull back from buying a residential investment property,” says Ms Mayne.
She says with REINZ reporting that the median house price in Auckland hit $1,040,000 in December, a mandatory 20%
deposit requirement for first-home buyers could mean over $200,000 for a relatively humble house.
“Which young couple can walk into the bank with that kind of money in their back pocket? Unless they’ve got parents who
can help them, it’s going to get very difficult for first-home buyers to secure adequate lending from March.”
Ms Mayne says going into February buyer demand remains strong, fuelled by record low interest rates and considerably
fewer properties available for sale.
However, she says another Reserve Bank policy - the mortgage holiday scheme - is coming to an end which will add
pressure to tens of thousands of Kiwi families. For nearly a year many have benefitted from the scheme, but it is set to
expire on 31 March.
“Banks will endeavour to work positively with their customers, but sadly there will be plenty of cases where banks or
homeowners have little choice but to sell the property. If we see a noticeable rise in exit or mortgagee sales, that
will only have a negative impact on overall house prices,” she says.
While REINZ’s latest sales data for December had the country’s average median house price up by 19.3% compared to a year
earlier, Ms Mayne expects property rises in 2021 to return to a more sustainable track.
“When you weigh up economic uncertainty for the year ahead, a shrinking buyer pool due to borrowing restrictions, and
more Kiwis surrendering their mortgages, it’s easy to see why February may well prove to be the best time to sell in
2021.
“One thing is definitely looking likely: February is set to be the last month that many first-home purchasers and
property investors can get into the market with a smaller deposit. Note to prospective sellers: Don’t miss out on these
highly motivated buyers,” says Derryn Mayne.