Loan curbs put home ownership in doubt
Potential first-home buyers in the Nelson region are worried new restrictions on home loans will put the dream of owning their own home out of reach.
The Reserve Bank has finalised tougher-than-expected restrictions on low-equity home loans that come into force from October 1.
In a speech last week, governor Graeme Wheeler announced banks would have to restrict new lending with loan-to-value ratios (LVRs) of over 80 per cent to no more than 10 per cent of the dollar value of their new housing lending flows.
That will dramatically reduce the amount of high LVR loans that the banks are writing, making it much harder to get a mortgage with a deposit of less than 20 per cent.
According to figures from Quotable Value released earlier this month, in July the median price for Nelson houses was up 4.6 per cent on last year, and the mean house in Tasman was worth $398,724, up 3.3 per cent on last year.
Figures released by the Real Estate Institute of New Zealand showed the median price for Nelson was $345,000, down 1.3 per cent from the same month last year, when it was $350,100.
In Richmond, the median price was $399,750. This was a 4.9 per cent rise from last July when it was $381,000.
In Motueka, the median price was $359,500, up 22.3 per cent from July last year when it was $294,000.
This means homeowners in the region would need to scrape together anywhere between $69,000 and $79,950 for a house in the region.
Nelson Mail readers, responding to a post on the paper's Facebook page, were mostly opposed to the move, with many saying it put owning their own home out of reach.
Reader Sonya Watson said the move would kill the property market.
"How are poor [first] home buyers ever going to buy when they won't have the earning capacity to afford 20 per cent deposit?"
Reader Louise Raymond said the move would just open the market "for more rich foreign people to buy homes here".
"Had to listen to two English guys in a shop a couple of weeks ago talking about how they had made a tidy profit buying and selling houses in New Zealand.
"Made me sad. I know some New Zealanders do this too but it just seems sad that the poorer Kiwis can't even get a foot in the door when it comes to owning their own home."
But Claire O'Hara said first-home buyers should not be looking to spend $400,000 on their first house, and there were plenty of cheap houses for sale in the Nelson region.
"I think it's funny that everyone is crying hard done by. Saving is not easy, it takes discipline, choices, hard work and determination, if you don't have those attributes you wouldn't get a house with a 5 per cent deposit.
"You also need to not expect a mansion or perfect first house or the most desirable location, I think a reality check is in order for the majority of those whining."
The final announcement was harsher than the 12 per cent "speed limit" that the banks were informally asked to prepare for in June.
Mr Wheeler said the Reserve Bank was concerned about the rate at which house prices were increasing and the risks that posed to the financial system.
The LVR restrictions were designed to help slow the rate of housing-related credit growth and house price inflation, reducing the risk of a substantial downward correction in house prices.
- © Fairfax NZ News