colinrealestate

News of the week has clearly been Fonterra’s dirty pipe in processing their whey back in May last year and the global fall out from this recall. The on flowing damage to New Zealand’s “clean and green” image is clear, and will take some time for us to regain confidence in the market.
Further news has been the anticipated response by the Reserve Bank placing restrictions on the LOAN-TO-VALUE ratio. This is the Reserve Bank’s response to their concerns in relation to our economy with house price inflation but also the high risk lending. The central bank has settled on a ‘speed limit’ approach to proposed restrictions on high loan-to-value ratio mortgage lending, effectively reducing the volume of low-equity lending banks can offer in a given period rather than banning it outright.
The general consensus from economists is that first home buyers will end up bearing the brunt of this, which is obviously not the outcome any of us want. There is expected to be an increase in First Home buyers seeking to secure a loan or property before the above comes fully into effect on September 30th, 2013.
BNZ Chief Economist Tony Alexander does not believe this move by the Reserve Bank will have the desired effect of slowing the house prices. He said that “house prices would likely continue to rise for at least another three years.”
The National Government has responded with changes to the Loan-to-value Reserve Bank restrictions through changing the First-home subsidy through Kiwi Saver, these are outlined below:
What: $1000 subsidy for every year of saving, up to $5000 each ($10,000 for a couple).
Current criteria: Combined income up to $100,000; house worth up to $400,000 in Auckland or $300,000 in most other places; no minimum deposit required.

New criteria: Combined income up to $120,000; house worth up to $485,000 in Auckland or $300,000-$425,000 elsewhere; 10 per cent deposit required

Filed under: REAL ESTATE | Tagged: Real Estate