Planned loan controls may boost local market

By Kim Fulton

1 comment

A real estate boss says new lending restrictions being hinted at for the Auckland housing market could impact on Northland, with more house hunters coming into the region with money to spend.

The Reserve Bank has indicated it is looking at the possibility of introducing new lending restrictions or tightening existing ones such as those on loan to value ratios (LVRs) in the Auckland market.

Reserve Bank Governor Graeme Wheeler said imbalances in the housing market were increasing with house price inflation lifting again in Auckland, after cooling in late 2015 and early 2016 following new restrictions in investor loan-to-value ratios and Government measures introduced in October.

Mr Wheeler said debt-to-income restrictions could be one of the potential responses to rising house prices. The restriction was used in the United Kingdom, where most buyers could not get a mortgage higher than 4.5 times their annual income.

LJ Hooker Whangarei chief executive Paul Beazley said tightened restrictions might drive more buyers to Northland because of the region's significantly lower house prices.

However, slowing down the selling process in Auckland could also potentially result in fewer buyers arriving, as a lot of those moving to the area first had to sell up in Auckland.

Mr Beazley said the migration of people from Auckland to the north had already been noticeable and was having an impact on house prices.

Listed stock was also lower as a result of more property being sold. He said the new Auckland arrivals were a good thing for the region.

"It's not as though the north's over-crowded or anything."

Auckland needed more new houses but that wasn't achievable in the short-term, he said.

The amount of high loan-to-value ratio home lending by banks has tumbled since October 2013 when the Reserve Bank imposed a 10 per cent limit on lenders writing residential mortgages with a deposit of less than 20 per cent. It added Auckland-specific restrictions last November.

- Northern Advocate

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