It’s not time to panic

Manawatu Standard - Property Weekly - - Property Weekly - By Emma Good­win

Win­ter is a time when the grass grows more slowly, and when the prop­erty mar­ket also slows down a lit­tle. On a cold, dull day, a prop­erty doesn’t usu­ally look its best, and ven­dors are con­se­quently re­luc­tant to list their homes in the ab­sence of a press­ing need to sell.

Tra­di­tion­ally, the mar­ket is slow over win­ter, but re­vives in spring.

This means that houses re­main on agents’ lists for a lit­tle longer, which can make the mar­ket look weak.

Na­tion­ally, the num­ber of house sales is down by about a third from the same time of last year. But Quotable Value says peo­ple should not go into a tail­spin.

‘‘It’s not that peo­ple are neg­a­tive about in­vest­ing in prop­erty. It’s more a case of ‘do noth­ing’,’’ says QV re­search di­rec­tor Jonno Inger­son.

First-home buy­ers are be­ing hit by banks tight­en­ing their purse strings and want­ing larger de­posits be­fore loan­ing.

‘‘Cri­te­ria have cer­tainly in­creased,’’ says mort­gage ad­viser Brent Jaslarz, of Mort­gage Link Manawatu.

A few years ago, buy­ers could get 100 per cent mort­gages. But Mr Jaslarz says that, al­though such mort­gages are not un­heard of in to­day’s mar­ket, they are rare.

First-home buy­ers with low de­posits can still get into a house, how­ever.

‘‘There are still 95 per cent mort­gages avail­able. But it’s tough to get them, and the fees are a lot higher.’’

There’s also the Wel­come Home scheme – for homes to the value of $200,000 with no de­posit, or to the value of $280,000 with a de­posit of just 15 per cent of the amount above $200,000.

How­ever, most banks are de­mand­ing a 15-20 per cent de­posit.

‘‘West­pac will work with 10 per cent and Ki­wibank with 5 per cent. Na­tional Bank will lend up to 90 per cent, but only to ex­ist­ing cus­tomers.’’

How clients can ser­vice the loan is also com­ing un­der closer scru­tiny.

‘‘Bud­gets and spend­ing are looked at closely, to see what you’re spend­ing your money on. Things like the TAB and the pub don’t look good.’’

Un­der an­other change, clients now need to have a greater sur­plus at the end of the month than pre­vi­ously nec­es­sary to en­sure they can ser­vice the loan.

‘‘A sur­plus of at least $200 is re­quired now, [com­pared with only a dol­lar be­fore at some banks].’’

But Mr Jaslarz says a cou­ple in Palmer­ston North who are both work­ing should be able to ser­vice a $250,000 mort­gage with a $15,000 de­posit.

Al­though putting down a small de­posit might seem like a good idea, to be able to get into a house sooner, peo­ple need to weigh up the pros and cons of ei­ther mak­ing a low de­posit and higher monthly pay­ments or wait­ing a lit­tle longer to come up with a higher de­posit.

‘‘Ev­ery bank has raised its ser­vic­ing rates, so a low de­posit can cost you more in fees.’’

Wait­ing game: Na­tion­ally, the num­ber of house sales is down by about a third from the same time of last year. But Quotable Value says peo­ple should not go into a tail­spin.

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