Timaru housing remains affordable
Timaru is still well positioned in terms of housing affordability, according to commentators.
Reserve Bank governor Graeme Wheeler has forecast 8 per cent mortgage interest rates by early 2016 if the housing market remains heated.
The latest Quotable Value (QV) monthly property value index shows that nationwide residential values for September increased 8.4 per cent over the past year.
Statistics from QV show the average house in Timaru costs $268,896.
Timaru mortgage broker Gary Dobbs questions that figure and puts the average cost of a house here closer to $200,000.
At $200,000, the average mortgage would go up between $40 and $70 a week if interest rates hit 8 per cent, he said.
"Most people who buy a house have a budget of 8 per cent; you can't expect to budget on 5.5 per cent. I generally tell anyone to budget on 8 per cent."
Mr Dobbs said banks had tightened lending criteria but would be more keen to lend once a backlog of pre-approvals flowed through the system.
"That's a three-to-six-month problem; there will be other options in the next six months.
"In the long run it's going to be good because people will have to save money; it is not difficult to get a 10 per cent deposit in Timaru compared to the main centres," Mr Dobbs said.
Broker Malcolm McDonald said it was early days in terms of loan-to-value ratio (LVR) guidelines.
"Only time will tell; the present situation has not even had time to bed in yet but over time we shall see interest rates go up and within the cycle see them come down again; history will show that the same will happen with LVRs," he said.
"South Canterbury will fare well; there is a relative vibrancy in the area with many projects to come to fruition.
"House prices are stable at present and still within the ability for joint home-owners to buy; single income earners may struggle a bit," Mr McDonald said.
Timaru financial planner Stephen McFarlane said interest rates would increase as confidence and growth in the economy picked up.
"The only question is the exact timing and how high rates will ultimately go. The new LVR rules are clearly having an impact but it's too early to know how much heat, if any, they will take out of the property market."
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