Price Caps Must Be Urgently Lifted - Failing First-home Buyers
“The Government may have lifted the price caps in April, but it was too little then and they’re woefully inadequate now. In fact, the only ones seemingly benefitting are some opportunistic developers,” says one real estate boss.
Owner of Century 21 New Zealand, Derryn Mayne, says there has been a perverse and heart-breaking outcome to the Government’s 23 March housing announcement. Then it declared ‘more Kiwis (will be) able to access First Home Grants and Loans with increased income caps and higher house price caps in targeted areas’.
“Many in the industry have observed that since the new price caps some developers with lower-cost stock have pushed up their prices accordingly to sit just below the new caps. So, for the very few properties priced under these caps, many have now been re-priced! All that means is more profit for developers and more debt for first-home buyers,” she says.
Ms Mayne says the property caps in Auckland are problematic, with first-home buyers in other parts of the country also struggling. She says the Government’s claim that the 1 April price cap changes ‘reflect the increased price of housing’ does not stack up.
“There are very few existing homes in Auckland for $625,000 or less, and it's increasingly impossible to buy a new build for $700,000 or less. Even in places south like Manurewa where I operate from, you couldn’t even buy a very tired semi-attached two-bedroom granny flat for that!”
Ms Mayne says the Government urgently needs to revisit the price caps as too many first-home buyers are missing out at a time when interest rates have never been lower.
“Can you imagine just how many people are trying to buy that $699,000 new townhouse and just how few succeed. All that the ridiculously low caps are doing is exacerbating buyer desperation and pushing up the prices of everything else,” she says.
While several New Zealand cities and districts saw their price caps lift in April, many areas were overlooked despite experiencing enormous price growth. Price caps for the ‘rest of New Zealand’ in places like Gisborne remain at $400,000 for existing properties and $500,000 for new builds.
That’s despite recent REINZ data showing 90% of houses sold in Gisborne were in excess of $400,000 and 75.6% exceeded $500,000.
The Government has since confirmed there were no plans to make any further changes around price caps despite a parliamentary petition calling for them to removed, and REINZ voicing its disappointment.
The Century 21 leader says all eyes will be on REINZ’s median house price sales statistics for May out this week.
“If the latest statistics don’t show a significant slowdown of nationwide price growth as the Government anticipates, then some pride must be swallowed. If the Finance Minister really wants to ‘tilt the balance towards first-home buyers’, lifting the price caps so more can get into the market would be a good start,” says Derryn Mayne.