Auckland home shortage bites hard

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When I got home the other night I found a note from a real estate agent saying she had buyers for properties in my street.

As any Auckland house-hunter can testify, there are slim pickings at the moment — it’s something I mentioned a few months back when the trend started to emerge. But the shortage of houses for sale has become a lot worse, leaving wannabe buyers starved of choice and at least some real estate agents scratching around for something to sell.

Industry players tell us that homeowners with a view to selling are sitting tight. It could be they don’t want to go to market seeing there is so little to buy, or they are waiting for the spring surge and hoping for a higher price.

Higher LVR

The Reserve Bank’s Graeme Wheeler is raising the loan-to-value requirement for property investors  to 40 per cent  from September 1, but expects the banks to adopt  the change  right away.

The new rule will apply across the country and loans to construct new dwellings  will continue to be exempt.

Wheeler says:  “A severe fall in house prices could have major implications for the functioning of the banking system and cause long-lasting damage to households and the broader economy.

“We expect banks to observe the spirit of the new restrictions in the lead-up to the new policy taking effect.”

It’s looking likely the Reserve Bank will reduce the OCR to 2 per cent on  August 11.

Median values up

According to the Real Estate Institute the national median value of a home is $500,000. In Auckland it’s $821,000, Northland  $360,000 and in Central Otago Lakes it’s a hair over $730,000.

REINZ’s Bryan Thomson says: “Although there is much discussion about the housing market and increasing new build supply, the fact remains that the vast majority of the supply comes from the sale of existing properties.”

There will be no quick fix to the housing issue. As Finance Minister Bill English said earlier this year, it “will take 10 to 15 years to sort out”.

Crisis

Over at property data firm CoreLogic, its head of research, Jonno Ingerson, says pressure has been increasing on the Government to admit there is a “housing crisis”.

He writes that the Government has countered  with claims it has a “comprehensive plan” which includes increasing housing supply, especially in Auckland, and working with the Auckland Council.

He says: “That helps to tackle supply but they have also talked about the need to constrain demand. Demand can come in the form of more people entering the country/Auckland, or it can come in the form of more people having access to mortgage finance.”

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