LVR restrictions have been a failed experiment
Nationwide property market analysis from Harcourts shows the LVR restrictions have been a failed experiment
The average house in New Zealand now sells for $502,306, which is a record high, up 12% on the same time last year and 8% on October, the month LVR restrictions were introduced.
In Auckland and Christchurch the restrictions and rising interest rates are having little effect on the market, with high demand and competition countering any moderating influence of the Reserve Bank.
Provincial New Zealand is where the LVR restrictions have been felt most keenly, however even here they are staring to lose their effect, with the average price up by 10% in the Central Region and 5% in Wellington. Buyers now understand there are ways around the need for a 20% deposit and are seeking assistance from second tier lenders, family and credit card debt.
The disparity between the markets in Christchurch and Auckland compared to the rest of the country is best indicated by a comparison of average prices. In Auckland you will pay over double what you will in the provincial South Island for the average house.
It is evident from Harcourts’ figures that the LVR restrictions have been a failed experiment. In the heated Christchurch and Auckland markets they have had little effect. Only first home buyers and investors in provincial New Zealand have been impacted upon. However, this is problematic as the LVR restrictions were not initiated to temper these already sluggish markets.