In this weeks mortgage news, there is much news on rising house prices. Prime Minister John Key has promptly his weekly post-cabinet news conference to justify his Government’s record on housing affordability in the wake of an OECD report showing Kiwi housing was the most expensive in the OECD relative to rents. This was particularly surprising because this has not been the case in the past.
Key said the housing market was not a “runaway train” and that National was moving to address a very demanding supply side issues underpinning house price inflation in all around New Zealand, but especially in Auckland and Christchurch.
“Over half of all the people coming to New Zealand are skilled workers. Many of those people are adding to fixing those supply issues. They may be engineers or quantity surveyors or specialist IT people that the country needs,” he said.
In light of these events, Key said Labour had opposed the Government’s moves to increase housing supply, both through its Special Housing Areas and Housing Areas legislation, and through reforms to the Resource Management Act.
LVR Lift: Wait or Buy Now?
Another article on mortgage this week tells us home owners or buyers to not wait until the restrictions come off the banks to ask for a home loan. If you can buy now, then they advised that you do so. Deputy Reserve Bank governor Grant Spencer signaled last week that loan to value restrictions on banks could be lifted by the end of the year. Since October all banks have had a 10 per cent cap on new lending to home-buyers with a deposit of less than 20 per cent driving many first home buyers away from the market. Nevertheless, experts say those who wait for the restrictions to come off face higher interest rates and potentially higher house prices – especially in Auckland.
To sum up, waiting can end up costing you much more and can turn out to be a very expensive option. He ends by saying “If you look at a house worth $500,000 now in six months time it could be $525,000.” To consider much of this information, maybe waiting for the LVR lift is not the best idea financially.