First home buyers are having to shell out on average nearly $94,000 more to get on the property ladder than a year ago.
Data from CoreLogic shows the median price paid in February for a first home buyer was $615,000 – 18 per cent higher than a year ago or nearly $93,700 more.
Kelvin Davidson, CoreLogic senior economist, said there were signs that first home buyers were starting to creak under the pressure of raising ever-larger deposits, even with their access to KiwiSaver funds taken into account.
“At 22 per cent, their share of purchases has eased back down to levels last seen in early 2018.”
Meanwhile mortgaged investors’ share of property purchases hit another record high last month at 29 per cent of all property purchases.
February was the last month before loan to value restrictions on bank lending were officially back in place although most of the major banks had already bought them back.
From March 1 banks were restricted to a 5 per cent cap on new lending to investors with a deposit under 30 per cent and up to 20 per cent of new lending to owner-occupiers with a deposit under 20 per cent.
From May 1, the 5 per cent investor cap will rise to deposits under 40 per cent.
But Davidson expects investors will face even more restrictions in a bid to cool the hot property market.
“In addition to the reinstated LVRs, it’s looking almost certain to us that restrictions will be imposed on interest-only lending for investors (as well as potentially caps on debt to income ratios).”
He said the Australian experience suggested that tighter interest-only standards can have a significant and lasting impact on investor behaviour.
When the Australian regulator put a cap on interest-only loans of 30 per cent across new lending from September 2017 to December 2018 it fell from more than 45 per cent to the current level of less than 20 per cent.
“This could hint at a mindset change amongst investors in Australia and potentially signals where New Zealand might head given that out interest-only lending is still about 27 per cent of the total and more than 40 per cent for investors specifically.”
Source: Read Full Article