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ANZ: Is market sustainable?

Momentum in the housing market may not be sustainable, ANZ says in its latest Property Focus report.

Wednesday, May 1st 2013, 12:00AM

by The Landlord

It said the overall trend in the housing market and residential building consent activity continued skyward last month, although construction rates were still too low in Auckland.

“Our main concern is around the likely durability of a nationwide housing market recovery, given already-high debt levels and a weak labour market backdrop.”

It said the economy was showing signs of becoming unbalanced, with a lift in spending activity but the on-going effects of the drought and the high currency making business tough for exporters. Labour market data was still week.

ANZ uses 10 gauges to signal which way property prices might go. Only one – interest rates – is pointing purely up this month. The bank noted that there had been a small drop in some of the fixed rates available.

Affordability had been dampened by another lift in house prices, the bank noted. The Real Estate Institute reported house price inflation had reached an annual rate of 8.6%, the highest since October 2007.

But serviceability was under control because of the low interest rates on offer. The report noted that debt servicing as a percentage of disposable income was at a 10-year low.

Supply factors were starting to exert less upward force on prices as more houses became available but the report noted that large shortages still existed in Auckland and Christchurch.

There had been a small lift in the pace of rental price growth.

ANZ also commented on the possibility of loan-to-value restrictions being implemented to tackle the heat in the housing market. 

It said such a measure would limit the funding available to marginal borrowers and make some people think about whether they could afford the home loans they wanted.

It said LVR restrictions could also alter market expectations of credit and property price cycles.

But it also noted that it LVR restrictions might be difficult to implement, and might just move lending to the non-bank sector.

Restrictions could be difficult to apply consistently with different valuation components interpreted differently. The report said restrictions would also not address localised regional property issues and a drop in the number of transactions could increase house price volatility.

LVR restrictions could add compliance cost, ANZ said, and make it harder for first-home buyers to purchase a home. It said overseas evidence of LVR restrictions did not provide conclusive evidence of them having worked.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

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