Virus a boon for first-home purchasers
With loosening deposit rules and property prices expected to slump, estate agents say the coronavirus crisis could help bring home ownership to more New Zealanders.
However, how big a hand-up the crisis presents depends on how many young homeowners emerge from the turmoil with a job and money in the bank.
‘‘It’s going to benefit people who have jobs . . . that’s what it comes down to,’’ Ray White head of projects Grant Dickson said.
‘‘If people are losing jobs, every home is going to be a bit like a lolly shop, because there’s going to be fewer people looking to buy.’’
It could mean more openings for those who’ve been waiting for their chance, he said.
It is expected that New Zealand houses prices will fall in the wake of the coronavirus pandemic and effective lockdown of the economy for five weeks. But by how much remains uncertain.
As of yesterday, the Reserve Bank of New Zealand also removed loan-to-value ratio (LVR) restrictions, which should make it easier for first-home buyers to buy a house with a smaller deposit.
Colliers’ national director for residential property development, Pete Evans, said overall the outlook for the first-home buyers looked positive.
The crisis had created a window of opportunity for new buyers to get in, Evans said.
‘‘I think Covid will stall the investors from coming back to the market; the investors will hold off.’’
On the other hand, they could be pushed aside by ‘‘cashed up’’ investors looking to exit commercial property and take up rental property, he said.
‘‘But in the short term, while the market is a bit slower and people are working out what to do, it’s a good time for first-home buyers to be looking around at what they can do . . . as long as they have a job.’’
REINZ chief executive Bindi Norwell said a likely recession could be good news for first-time buyers with financial security. However, some advantage would be offset by having their KiwiSaver funds drop to a much lower level than before the lockdown, she said.
The Reserve Bank’s decision on LVR restrictions would also ‘‘go a long way towards helping first-time buyers to get onto the market’’, she said.
Norwell said economic turmoil could see house prices fall drastically, as demonstrated by the 2008 global financial crisis (GFC).
‘‘In the first year after the GFC, median house prices across New Zealand fell by 5.9 per cent year on year.’’
However, the market recovered quickly, she said.
‘‘Whilst the recession technically lasted till June 2009, prices started rising again after January 2009.’’
By January 2010, median prices had increased 9.4 per cent over the previous
12 months and were sitting $10,000 above where they were in January 2008, when prices began to fall.
Figures show New Zealand’s coronavirus lockdown resulted in more viewings of property listings. However, economist Shamubeel Eaqub warned demand for housing was ‘‘going to be a lot less than it probably was’’.
‘‘The real estate agents want it to be a good time, but the reality is the labour market is going to slump, and the housing market is going to slump,’’ he said.