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Servicing tests to slow house price growth

Tough serviceability tests from the banks will keep house price growth at "gradual" levels across the country, according to research firm CoreLogic.

Friday, June 14th 2019, 12:11PM

The real estate specialists said the banks' "stringent" tests for new borrowers, along with slowing growth in the economy, would keep a lid on house price growth. 

The comment, from CoreLogic head of research Nick Goodall, comes as today's REINZ data showed house price growth of 0.2% in May. 

Analysts including Westpac senior economist Dominick Stephens believe house prices will soar off the back of the Official Cash Rate cut and cancellation of a capital gains tax. Yet CoreLogic believes banks' internal restrictions on borrowers will curb growth in the market.

"Despite the signs of renewed demand for property across most of the country we are not expecting property prices to soar," Goodall said.

Goodall said "price changes will likely be gradual" due to the bank servicing tests, but "more affordable towns" in "regional NZ" were more likely to see continued growth.

Advisers agree that bank behaviour is having an impact on price growth. 

"The banks 'self regulating' will still help to pull back house price growth to a certain extent - whilst rates continue to drop, banks' are not doing much to loosen criteria," said Craig Pope of Pope & Co Mortgages.  "Even if they do loosen criteria in places, its not enough to set the market alight," he added.

Q Group's Geoff Bawden said he expects tough servicing to continue. 

"I believe we are going to continue to see banks taking a hard line and individual approach to the way they assess business. This will be there way of demonstrating that they are being responsible in their approach, the question is - will the pendulum swing too far?"

According to the REINZ data, values held up last month, but volumes experienced a fall. In Auckland, there were 1,925 sales by real estate agents last month, a drop of 21% on May 2018.

The number of days taken to sell a property in Auckland also grew to 45 days. This was longer than Auckland's four-year average of 35 days.

 

Tags: REINZ

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Lender Flt 1yr 2yr 3yr
ANZ 5.69 4.35 4.35 4.55
ANZ Special - 3.85 3.85 4.05
ASB Bank 5.70 4.29 4.35 4.55
ASB Bank Special - 3.89 3.85 4.05
BNZ - Classic - 3.85 3.85 4.05
BNZ - Mortgage One 6.40 - - -
BNZ - Rapid Repay 5.85 - - -
BNZ - Std, FlyBuys 5.80 4.69 4.59 4.79
BNZ - TotalMoney 5.80 - - -
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.60 4.75 -
Housing NZ Corp 5.80 4.69 4.49 4.45
HSBC Premier 5.89 3.79 3.79 3.89
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.60 ▼4.60 ▼4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.65 - - -
Kiwibank Special - 3.85 ▼3.85 ▼3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 ▼4.69 ▼4.79 -
Resimac 5.30 4.86 4.14 4.19
RESIMAC Special - - - -
SBS Bank 5.79 4.85 5.05 5.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 3.85 3.85 3.99
Sovereign 5.80 4.29 4.35 4.55
Sovereign Special - 3.89 3.85 4.05
The Co-operative Bank - Owner Occ 5.65 3.89 3.89 4.05
The Co-operative Bank - Standard 5.65 4.39 4.39 4.55
TSB Bank 5.69 4.45 4.35 4.55
TSB Special - 3.95 3.85 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.79 4.69 4.79 5.19
Westpac - Offset 5.79 - - -
Westpac Special - 3.85 3.85 4.05
Median 5.80 4.35 4.35 4.19

Last updated: 19 July 2019 10:59am

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