Door opens for first home buyers
"We're dealing with some of the largest numbers [of first-time buyers] I've seen in 30 years of business." Craig Seton, Mortgage Link
There’s been an almost 40 per cent drop in the amount property investors are borrowing since tighter lending restrictions were introduced, providing more opportunities for first home buyers, a Manawatu¯ mortgage broker says.
Reserve Bank figures show investors borrowed $13.5 billion in mortgages throughout New Zealand in the 12 months to September 30.
That was 37 per cent less than in the previous year, and accounted for 23.6 per cent of the total $57.1 billion lent to house buyers in that period, down from a previous market share of 32 per cent.
The dent in investment buying coincided with the introduction of a rule that investors needed to have at least a 40 per cent deposit to buy a house.
Mortgage Link Manawatu¯ advisor Craig Seton said he could see that national trend reflected in Manawatu¯ , where the number of investors in the market borrowing had reduced hugely over the past year.
‘‘Investors used to be a big part of what we did when it comes to financing.
‘‘[But] they are few and far between now,’’ Seton said.
Setton said this has let more first-time buyers and owneroccupiers slip into the gap.
‘‘We’re dealing with some of the largest numbers [of first-time buyers] I’ve seen in 30 years of business ... [although] the lion’s share are still people looking to upgrade.’’
Those who kept investing in property after the restrictions were introduced tended to be very experienced, long-term investors.
There were also a few older borrowers looking to feather their nest egg after paying off the mortgage on their home, he said.
Westpac NZ chief executive David Mclean said it was ‘‘heartening’’ to see mortgage restrictions on investors appeared to have cleared the path for more first-time buyers to put down roots.
‘‘In many places, we’re seeing a welcome increase in young New Zealanders getting a foothold on the housing ladder.’’
Westpac issued 401 mortgages to first-home buyers in Manawatu¯ /Whanganui over the year since the restrictions were introduced - a 26 per cent increase on the previous year.
Manawatu¯ Property Investors Association president Pauline Beissel said the restrictions were a big part of why investors have been buying and borrowing less, but there were a variety of reasons behind the trend.
Housing was a key issue in the lead up to the election and the two main parties offered widely different policies to manage it.
Bessiel said part of the borrowing drop was investors holding off because of the uncertainty around what the rules would be.
But that was changing now the new Labour-led government was in place and providing a clearer course of action for investors and landlords.
In a monthly members’ survey, four of the 90 members at the first meeting after the coalition government came to power had bought new properties.
She said this followed a period of two-to-three months, during election campaigning, when no association members were buying.
Bessiel said rapidly climbing house prices had also made it harder for small-scale investors, who typically had one or two rental properties on top of their own home, to save up for a new house.
Manawatu¯ property values had been increasing $1000 per week on average this year, but that had also flattened off a little over the past month, she said