Property Market 2018 Part One: Win
We have now well past the halfway point of the year, so we have decided to look back at the wins and losses of 2018 in the property market, to help catch you up on the year so far under the new government.
In part one we will be looking at the wins over the last six months:
Low-Interest Rates
We started off 2018 with the news that interest rates would reach a record low, which has managed to hold throughout the year, as two and three year fixed rates at currently still remain at low levels with three year rates as low as 4.60%. The reserve bank also announced in June that the OCR (Official Cash Rate) would remain at 1.75 hinting that the economy may be running slightly slower than usual, but strong enough to keep the OCR as is. Many are predicting, however, that the next OCR announcement could be a cut rather than a hike come November.
The Ease Of Home Loan Restrictions
Another great start to the year saw the ease of home load restrictions in January, to allow banks to lend up to 15 per cent of their new lending to owner-occupiers with a deposit of less than 20 per cent – up from 10 per cent. For Property Investors lending was eased up to 5 per cent to investors with equity of less than 35 per cent – down from 40 per cent equity. This has remained the case throughout the year with the Reserve Bank announcing at the end of may that the current property loan restrictions would remain on hold for the time being.
Plans To Help First Home Buyers
The new government has also pushed forward many schemes and begun to float new ideas to better help first time home buyers into their first home. This has included the KiwiBuild scheme in which he revealed that the programme will aim to build 100,000 high quality, affordable homes over 10 years, with 50% of them in Auckland. Standalone houses in Auckland will cost $500,000 to $600,000, and revealed in July that the income caps will be set at $120,000 for sole purchasers and $180,000 for couples.
The government is also considering a scheme built on the “rent-to-buy” idea brought in with the Green Party, that could help many first home buyers get into homes faster by saving them $100 a week compared to a commercial mortgage. Officials have begun work on the policy that will give first home buyers the option to the opportunity to co-own a property with a bank or government agency to make it more affordable.
The shared equity scheme would allow third parties (Banks, government agencies etc.) to co-own a property by acclimating a share of the mortgage – the property then has the option to buy the remaining balance when they could afford to, including any capital gains.
A commitment To Building More Social Housing
The annual budget revealed that the government has also planned to invest $234m in Housing New Zealand to build 6400 more state and social homes over the next four years. Breaking that down, that would be around 1600 new state/social homes a year – which is more than that 1000 Labour promised during the election, but as Housing Minister Phil Twyford revealed, a little less than he would like – still a great foot forward for the new government.