Fewer First-Home Buyers May Help Avoid Higher Deposits
“Incredibly, nearly nine out of 10 real estate agents see prices as rising in their area. No one would’ve predicted that just eight months ago,” says Derryn Mayne, Owner of Century 21 New Zealand.
“At the same time, with activity from first-home buyers slightly cooling, here’s hoping the Reserve’s Bank plan to reinstate loan-to-value ratio (LVR) restrictions from 1 March can be avoided, with submissions on the Reserve Bank’s proposal now open until 22 January.”
Ms Mayne’s comments follow REINZ today releasing December’s REINZ & Tony Alexander Real Estate Survey. Agents report slight decreases in attendance at auctions and open homes, and the presence of first-home buyers and investors.
The Century 21 leader says two indicators in this latest survey reinforce key market influences are strong: Buyer FOMO (fear of missing out) remains at very high levels across all regions with a net 88% of agents reporting it; and only 12% of agents report that buyers now have employment concerns - down from 48% in June.
“With buyers feeling more comfortable about their future and highly motivated to buy for fear of missing out on a property, it’s safe to conclude that vendors can expect strong interest in their properties this summer,” says Ms Mayne.
The December survey also shows that a net 45% of agents have reported that they are seeing more investors in the market – still strong but down from a net 59% in the November survey.
At the same time, the net proportion of agents saying that they are seeing more first-home buyers in the market is at 50% - also still strong but down from a net 64% in November and the lowest since May.
Ms Mayne hopes this timely reported cooling will help save first-home buyers from blanket higher deposit requirements being imposed from March next year. Tougher LVR restrictions by the Reserve Bank, she believes, would unfairly kill off the Kiwi homeownership dream for many young people.
“The market remains strong, yet we’re seeing some slight cooling in activity exactly where it needed to come from. That’s partly a reflection that perhaps first-home buyers are tiring of this market, while retail banks are already self-policing their higher risk lending.
“Regardless, hopefully the Reserve Bank is pleased with such cooling, and won’t have to introduce punitive lending restrictions next year,” says Derryn Mayne.