New Zealand Real Estate Updates 2018

Ajay Kumar is one of the leading licensed financial advisors in New Zealand. He is owner and director of Global Financial Services. Global Financial Services is a highly-regarded award winning mortgage and personal risk advisory company. They have three different branches in Henderson, Manukau, and Mangree. They started our journey in 1999. They are one of the leading & best mortgage brokers in Auckland. I have interviewed Mr. Ajay Kumar regarding recent real estate trends. He gave informative inputs regarding real estate trends in 2018. Check out his full interview with Mortgage Reviews team.

1. How do you think the year 2018 will be for the housing market in Auckland?

There remains a strong demand for housing in heavily populated areas of NZ. Some lenders are beginning to soften their lending criteria in line with the Reserve Bank of NZ LVR restriction easing effectively 1 January and their own market share objectives. This will enable first home buyers as well as property investors easier access to credit in 2018. It will support an increase housing market activity during the next year. Despite the recently reported 0.9% drop in Auckland house prices, the overall housing market during 2018 will be better than 2017. House prices are unlikely to come down much further because the imbalance between demand and supply is still there particularly in more desirable locations. First-time home buyers, if possible should try to focus on new build properties as lending criteria tends to be easier for these types of purchases. If new build properties are not available within your budget, focus on affordable existing houses in a wider range of locations where supply is better to get yourself on the property ladder.

2. How will new government’s legislation might affect the first home buyer?

So far, none of the new government’s announcements particularly regarding immigration and foreign buyers are likely to have any major or immediate impact either on the housing market as a whole or first-time home buyers specifically. It is expected that as government policy supports the increased supply of new houses we will see a steadier and more contained house price market generally.

3. How is the credit lending situation for home buyers right now and what is the trend going forward?

Banks will follow the Reserve Bank of NZ guidelines. RBNZ announced on 29th November an increased confidence in the financial stability something it credits to a combination of Government policy and LVR restrictions in place since 2013. As a result, the Reserve Bank is undertaking a modest easing of the LVR restrictions.

No more than 15 percent (currently 10 percent) of each bank’s new mortgage lending to owner-occupiers can be at LVRs of more than 80 percent.

No more than 5 percent of each bank’s new mortgage lending to residential property investors can be at LVRs of more than 65 percent (currently 60 percent).

Most of the banks are implementing this policy. It will enable to many prospective house purchasers to qualify for more lending subject to repayment affordability. It is a good sign for the housing market.

4. Would you say that it is the right time for home buyers to enter the market?

It is difficult to answer because what will be the future demand and supply is difficult to predict accurately but it is widely acknowledged that we do not have the housing stock or the construction capacity to meet our needs anytime soon in the heavily populated areas of NZ. However, if you have a goal to own your own home and you are in a position to achieve this then, yes, it is a good time to buy because it will fulfill one of your important goals. Rents are increasing due to the housing stock shortage and in some instances the withdrawal by landlords from the long-term rental market in favour of short-term stays via organisations like AirBNB which can put a burden on your budget when you find your landlord has increased rent or is unwilling to renew your tenancy lease in favour of the short-term stay market. Of course, apart from the stability of owning your own home, all future capital gains go to house owners, but not to the tenants.

5. What would be your five best tips for first home buyers?

  • Buy the house only, if you can afford to repay mortgage as well as the other related costs such as rates, insurance, maintenance etc.
  • Have a Kiwi- Saver account, if you do not have one already.
  • Deposit your income from all the sources in your bank account and keep all your savings whether local or overseas in your bank account
  • Reduced Credit Card limits as low as possible as limits (not outstanding balances) have a direct impact on the amount you can borrow, reduce/ repay hire purchases and personal loans.
  • Maintain a good credit rating by keeping on top of your bills and limit the number of credit checks done on you as they also have an impact.




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