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With weakening deposit rules and falling property prices, real estate agents say the coronavirus crisis could help bring home ownership to more New Zealanders.
However, the great help that the crisis presents depends on how many young owners come out of the crisis with a job and money in the bank.
“It’s going to benefit people who have a job … that’s what it comes down to,” said Grant Dickson, project manager for Ray White.
“If people lose jobs, each home will be a bit like a popsicle store, because there will be fewer people looking to buy.”
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It could mean more opportunities for those who have been waiting for their opportunity, he said.
Home prices in New Zealand are expected to drop in the wake of the coronavirus pandemic and the effective blockade of the economy for five weeks. But how much remains uncertain.
Starting Friday, the Reserve Bank of New Zealand also removed the loan-value ratio (LVR) restrictions, which should make it easier for first-time homebuyers to buy a home with a lower deposit.
Colliers’ national director for residential property development, Pete Evans, said that overall, the outlook for early home buyers looked positive.
The crisis had created a window of opportunity for new buyers to enter, he said.
“I think Covid will prevent investors from going back to the market, investors will wait.”
Dominion-Post
Reducing coronavirus restrictions could provide a window of opportunity for new buyers.
On the other hand, they could be rejected by “cash” investors seeking to exit commercial property and take rental property, he said.
“But in the short term, while the market is a little bit slower and people are deciding what to do, it’s a good time for first-time home buyers to be looking at what they can do … whenever they have a job.”
REINZ Chief Executive Bindi Norwell said a likely recession could be good news for first-time buyers, with financial security.
However, some advantage would be offset if your KiwiSaver funds drop to a much lower level than before the close, he said.
Dominion-Post
Housing prices quickly recovered from the 2008 global financial crisis, says REINZ.
The Reserve Bank’s decision on the LVR restrictions would also “go a long way in helping first-time buyers enter the market,” he said.
Norwell said the economic crisis could cause house prices to drop dramatically, as evidenced by the 2008 Global Financial Crisis (GFC).
“In the first year after GFC’s average home prices in New Zealand fell 5.9 percent on-year.”
However, the market recovered quickly, he said.
The-Dominion-Post
Many first-time buyers have found themselves in a difficult situation of reducing their Kiwisaver funds.
“While the recession technically lasted until June 2009, prices started to rise again after January 2009.
By January 2010, median prices had risen 9.4 percent in the past 12 months and were sitting at $ 10,000 above where they were in January 2008, when prices began to drop.
“The market recovered reasonably quickly.”
Figures show that New Zealand’s coronavirus blockade led to more views of property listings, however economist Shamubeel Eaqub warned that demand for housing “would be much lower than it probably was.”
“Real estate agents want it to be a good time, but the reality is that the job market is going to fall, and the housing market is going to fall,” he said.
