Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Reserve Bank Helps Real Estate, Now Govt Needs Policy Review

By Derryn Mayne

The Reserve Bank’s decision to remove its mortgage loan-to-value ratio (LVR) restrictions, for at least a year, will mean more young Kiwis can buy their first homes sooner. The days of banks needing a 20% deposit are over.

Deposits will still be required and banks’ assessment of people’s ability to service the debt will remain tough, but at least banks now have greater flexibility to assess mortgage applications case by case.

While the Reserve Bank is holding the Official Cash Rate at 0.25%, it is nearly doubling its quantitative easing programme to $60 billion in a bid to stimulate the economy and reduce the cost of borrowing. Well signalled to stay at record-low levels for some time, there’s now an expectation that mortgage rates will fall even further, with some already below 3%.

With lower deposit requirements, servicing mortgages being cheaper than renting in many cases, and vendors increasingly willing to negotiate on price, young Kiwis have the best opportunity to get on the housing ladder in more than a decade.

The Reserve Bank has pulled enough levers for now to help buyers, sellers, and the industry at large. The next thing is for the Government to review any legislation that may hinder real estate’s revival, including softening its foreign buyer ban - even temporarily.

New Zealand’s getting headlines all over the world for its overall handling of Covid-19. Many living in the likes of the United Kingdom, United States, and some European countries must be wondering ‘where is a safe place for me to live and invest my life savings?’

Many Kiwi ex-pats will also return off the back of the global pandemic’s economic fall-out. At the same time, our offices are getting plenty of enquiries from overseas investors keen to buy into new-build residential developments in the safe-haven of New Zealand.

The Government has given an assurance that it’s singularly focused on delivering things that will aid the country’s recovery. As part of that, they should revisit their policy which stopped almost all non-residents from buying existing homes. Opening up New Zealand real estate a little more would definitely provide a boost to the housing market and country.

When the Overseas Investment Amendment Bill came into force on 22 October 2018 its impact was swift and significant. Sales to overseas buyers dropped by 81% in the following quarter compared to the same time a year earlier. Any policy reversal would equally have a quick and demonstrable impact.

With recent statistics showing more foreign owners selling than buying, maybe we could allow those who already own property here to buy again. That would help with real estate transactions without lifting the proportion of foreign ownership. It would allow overseas property investors to sell part of their portfolio and reinvest in other aspects of the sector or in other parts of the country. Another idea is to just lift the foreign buyer ban in certain areas, such as Queenstown.

In the meantime, confusion reigns as to where the real estate market is heading. Some are saying it’s going to fall by double digits, while others are saying it should hold up relatively well given record-low interest rates and a continual housing shortage. All while buyers and vendors are wondering whether to act now or wait.

For those selling and looking to buy again, it’s important to remember they’ll be doing so in the same market, so it won’t make much long-term difference. For first-home buyers, waiting could prove a gamble because house prices might rebound sooner than expected. At the same time, surveys show most property investors remain keen to stick to their plans.

Rest assured, Century 21’s salespeople will continue to drive business hard, with plenty of Kiwis still wanting and needing to move house.

Derryn Mayne is the Owner of Century 21 New Zealand.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Tiwai Point: Rio Tinto Announces Plans To Close Tiwai Point Smelter

Rio Tinto has just announced that it will wind down New Zealand Aluminium Smelters - the Tiwai Point smelter - saying the business is no longer viable. More>>


Freight: New Report On Auckland Port Relocation

The Government has released a major new report on the options for relocating the Port of Auckland’s freight operations while deferring any decision on the issue. More>>


Chartered Accountants: COVID-19 Fails To Knock Kiwi Investor Confidence, But More Disclosure Wanted

Three months of COVID-19 lockdown and investment turmoil has done little to knock confidence in New Zealand capital markets and listed companies with overall investor sentiment very similar to 2019, an investor survey held in mid June shows. However, ... More>>


Taxation: Black-Market Tobacco Sidesteps $287 Million In Excise Tax

Year-on-year increases in consumption of illicit tobacco in New Zealand have seen illegal trade swell to 11.5% of the total market. If consumed legally, illicit products would have netted the Government $287 million in excise tax during 2019. Independent ... More>>


Energy Sector: Meridian Spilled Water To Hike Electricity Prices - Authority Ruling

The Electricity Authority has found that generator Meridian Energy manipulated the power market, costing consumers about $80 million. More>>


XE Data Update: RBNZ Official Cash Rate Decision

The RBNZ will keep the Official Cash Rate (OCR) at 0.25%. T he key points in the RBNZ statement are: RBNZ keeps the OCR unchanged at 0.25% Maintain the LSAP (large scale asset purchase) at NZD$60 billion. Committee prepared to use additional monetary ... More>>


Electricity: Kiwis Ignore Promise Of Cheaper Power

Electric Kiwi and Flick Electric Co are joint winners of Canstar Blue’s award for Most Satisfied Customers | Electricity Providers From putting on an extra layer – rather than turning on a heater – to turning off lights and choosing the energy-saving ... More>>


Electricity: Transmission Pricing For A Low Carbon Future

The Electricity Authority has decided on new guidelines for transmission pricing. James Stevenson-Wallace, Chief Executive of the Electricity Authority says the new guidelines will deliver significant benefits to consumers, through lower electricity ... More>>


RNZ: Economic Activity And Business Confidence Bouncing Back

Two surveys from ANZ show business confidence and economic activity have rebounded, but uncertainty about the future remains extreme. More>>


NIWA: The Climate Record That Keeps Getting Broken

Among the multitude of New Zealand climate statistics there is one record that continues to be broken month after month. Since January 2017 there has not been one month that recorded a below average nationwide temperature, according to NIWA’s seven station ... More>>


Govt: Extended Loan Scheme Keeps Business Afloat

Small businesses are getting greater certainty about access to finance with an extension to the interest-free cashflow loan scheme to the end of the year. The Small Business Cashflow Loan Scheme has already been extended once, to 24 July. Revenue and Small ... More>>


Science: 2019 Prime Minister’s Science Prizes Announced

The 2019 Prime Minister’s Science Prizes have been announced in a digital livestream event today. The Prizes recognise the impact of science on New Zealanders’ lives, celebrate the achievements of current scientists and encourage scientists of the ... More>>


RNZ: Fuel, Alcohol Costs To Go Up From Today

The increase today in the taxes on fuel, road user charges and alcohol is being called a tone-deaf move. More>>


Stardome Observatory: Young Kiwi Astro-Photographer Shoots For The Stars

Matariki by Josh Kirkley. The stars are aligning for up-and-coming Auckland-based astro-photographer Josh Kirkley (Kāi Tahu). During lockdown, one of his images was picked up by NASA and shared on the space agency’s Instagram to its 59.2 million ... More>>

DCANZ: Time For EU To Commit To A Level Playing Field For Trade

The Dairy Companies Association of New Zealand (DCANZ) has welcomed New Zealand Trade Minister David Parker’s statement that it is unacceptable for New Zealand exporters to continue facing an ‘unlevel playing field’ in the EU. Details leaked ... More>>


New Zealand Government: Supporting Kiwi Businesses To Resolve Rent Disputes

The Government will legislate to ensure businesses that suffered as a result of the COVID-19 response will get help to resolve disputes over commercial rent issues, Justice Minister Andrew Little announced today. More>>