[ad_1]
For the first time in years, more than 20 years are watching the real estate market.
Photo: RNZ / Claire Eastham-Farrelly
Trade Me has reported an increase in people between the ages of 18 to 29 browsing listings, reducing it to low interest rates and the temporary scrap of the loan-to-value ratio (LVR), following Covid-19.
Homeownership has been declining steadily for years under the age of 30. But after the blockade, that typically blocked group is beginning to show itself.
Trade told me that during March and April, there was a nearly 40 percent increase in interest for those under the age of 30, compared to this time last year.
It was the only group that showed a big change in behavior, said Trade Me property chief Nigel Jeffries, adding that it was the result of loan changes.
“Obviously, there are very low interest rates, changes in the LVR, and there is some expectation that [house] prices will drop, “said Jeffries.
“So there will be a lower entry point for those buyers in the market.”
Jeffries said there was evidence that this was genuine interest, but it was difficult to know if that would translate into sales.
“If all they do is look at pictures and read descriptions, it could be said that they are quite passive home buyers, but if they start creating watch lists and playing with mortgage calculators and sending emails to agents who ask questions, they would say they are much more qualified than passive people, “he said.
“We can see that activity levels further down the funnel are also skyrocketing.”
Trade Me data also shows where potential buyers of all age groups are interested.
Jeffries said there was significant interest in the Queenstown Lakes area.
“That area has increased 130 percent, making 130 percent more people looking for properties in that area compared to this time last year. Part of that story is that many consumers expect a drop in price.” .
It was still too early to predict what changes, if any, there would be in house prices, he said.
Furthermore, it was a “wait and see” situation as to how eager banks would be to lend money to potential buyers while the economy was unstable, he said.
Some housing advocates fear that the scrapping of the LVR will provide only a momentary sweetener for first-time homebuyers, before it creates an investor market.
The restrictions mean that no more than 10 percent of new banks by value mortgages could be for people with deposits of less than 20 percent, but that will stop for a year.
Shift Aotearoa is a five-year project that focuses on a better housing system, with the right to housing in the center.
Its leader, Brennan Rigby, said scrapping the LVR risked making the market more investor friendly.
“At this particular time, we are gaining more credit capacity for banks by removing the LVR restrictions,” said Rigby.
“More lending capacity, cheaper assets, low, low and low interest rates, I think they are a rather risky combination of features for our housing system.”
Rigby said it was not anti-investment, but that decisions for the housing system should be carefully considered.
“The Reserve Bank’s decision to remove the LVR restrictions disables the most successful intervention in our housing system in recent memory,” he said.
“The changes to the LVR restrictions in 2016 removed the heat from the market and gave hope to the first home buyers literally overnight.”
He said there was no reference to family well-being in the Reserve Bank consultation and that the decision-making process was problematic.
“The consultation period was very short and the material describing the implications of the proposal was insufficient, given the importance of this movement.”
He said an alteration of the LVR, rather than canning it, would have been more appropriate.
Housing economist and commentator Shamubeel Eaqub said he did not believe that removing the restrictions would have a major impact.
He said these were not normal times and that banks probably would not be handing over money quickly.
“Many of the reasons that the LVR restrictions were removed were so that we didn’t get into the issue of a decrease in home prices that made it difficult for people to renegotiate their mortgages, payment terms, etc.,” he said. .
“If you think about what will happen next year in the real estate market, not much will happen, there will be very few transactions because the bank will be rationing.”
CoreLogic research analyst Kelvin Davidson said activity in the market during Alert Level 3 had been slow, but that it could change as the country moved to Level 2.
“Actually, we will see some activity and decent prices in the [next] a couple of months, but as we get to the end of the year we will see an increase in unemployment and a confidence boost. “
Davidson said sales will likely weaken in the last quarter of the year.
People looking to buy their first home should consider doing so sooner rather than later, he said.
* See all Covid-19 RNZ coverage
