Taupō District house sales volumes and prices fell at the end of last year. Photo / NZME
Taupō District house sales volumes and prices fell at the end of last year. Photo / NZME
Taupō District house sales volumes and prices fell at the end of last year and locals in the industry are blaming a law change that imposed tougher lending rules.
The Government brought in a number of changes to the Credit Contracts and Consumer Finance Act (CCCFA) late last year, withofficials saying the move would mean Kiwis could expect better protection from high-cost loans and unaffordable debt.
But since their introduction in the lead-up to Christmas, there have been numerous reports of would-be home-buyers having mortgage applications knocked back due to their spending habits - including the number of takeaways or restaurant meals they purchased, or domestic travel.
From November to December last year, the median house price in the Taupō District dropped 1.9 per cent from $790,000 to $775,000. The volume of sales dropped 24.5 per cent from 106 to 80.
In December 2020, the median house price in the Taupō District was $600,000 and the volume sold was 103.
Tremains Taupō Real Estate sales manager Annalise Johnsen says the median price is not surprising but also not a "real snapshot" of the current market.
"The banks are probably our biggest concern because they reduced the lending power that came for all our first home buyers, for anyone that was pre-approved, and there was definitely a wobble in November.
"Then we had an exceptional December. You have to look at it over about three months to see what we're actually achieving and these little wobbles in the market."
Annalise says some people lost about $200,000 worth of lending power because of the banks' new criteria.
"They were reading statements line by line to see what people are actually spending. They may have a massive amount of equity in a property but the serviceability was down to how many cups of coffee they had each week.
"I think that needs to be addressed more than anything. I'm not really concerned about the median price dropping, it's very historical and changing month by month because the activity is still there.
"We're just coming into a more balanced market, rather than a manic market like we had last year. Last year was so manic, we had to see a correction at some point. There are still people needing to sell and people wanting to buy, we just needed a little adjustment."
Mortgage Link owner-director Wendy Yorke says it is "very tough" for first home buyers at present.
"No banks are lending over 80 per cent, unless it's exempt from the reserve bank rules which only means new builds or first home grants. The problem with the first home grants is the cap for this area is only $400,000.
"Land prices are so expensive, most first home buyers can't afford the new builds because they're looking at $800,000-plus."
Wendy says it is a "very frustrating" situation for would-be buyers.
"I've got people who will qualify for a 90 per cent home loan if the banks open up the doors, but the banks can't do that because they have to be within the reserve bank rules.
"At the moment, unless you've got 20 per cent there's not much we can do at all until the banks open up a bit more. It will happen, we just don't know how long it will take."
Her advice to those thinking about trying to buy a home is to watch their spending.
"I don't think the scrutiny [of bank statements] is too extreme - I think a lot of people don't actually realise what they are spending. I put the challenge to my clients to go through their statements for the last month and work out what they did spend.
"Often they'll tell me $200 a week on groceries but when I go through the statements it's $300 a week. Then there's the dairy, lunches, etc, which all add up too.
"If I can show that what you are paying in rent combined with what you are saving would cover the mortgage repayments, we have a better case to take to the bank."
