Rules are making a difference: Helm

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Claims that the LVR restrictions are having no impact on house prices in Auckland are misguided, a property commentator says.

Thursday, December 5th 2013, 5:34PM 2 Comments

by Susan Edmunds

Barfoot and Thompson released data this week that showed the average sales price in November increased to $684,646 agency-wide, and the median increased 5.3% to $621,400.

Although sales numbers were down from October, the agency said there was no real indication that the new rules were slowing activity. From October 1, banks have had to keep their proportion of low-deposit new lending to no more than 10% of new loans.

But Alistair Helm said the Barfoot and Thompson claim was misleading. He said the fact that there were fewer sales below $500,000 in the month – 370 compared to 457 in October – had pushed up the average price.

Barfoot and Thompson said the number of sub-$500,000 sales was in line with those in September.

He said the bottom end of the market would be affected most by the LVR rules and provincial New Zealand was already hurting. “All other indicators, like mortgage demand, the BNZ/REINZ survey have shown that the level of inquiry and interest in property at that lower price point has been dramatically impacted.”

Auckland Chamber of Commerce chief executive Michael Barnett agreed the regions were suffering.

He said the initial impression of the Chamber was that the rules were prompting property developers to focus on the top end of the market, which could have an impact on the long-term availability of affordable housing stock.

He said decision-makers and policy designers needed to realise that Auckland needed a different approach to that taken with the rest of the country. “It’s unfair to keep penalising the rest of New Zealand for Auckland’s problems,” he said.

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