Real estate agents in Auckland call for lending rule relaxation

Demand is growing for first-home buyer house lending restrictions to be relaxed, with one real estate agency saying that Aucklanders now needed an average NZ$200,000-plus (US$145,751) deposit to buy their first home.

Barfoot & Thompson's Peter Thompson, the Real Estate Institute and Century 21 national manager Geoff Barnett want the Reserve Bank lending limits scrapped for newbie buyers and TailRisk Economics principal Ian Harrison has released a new report on proposed debt to income limits.

Barnett decried that first-time Auckland buyers would need an average $200,000-plus deposit.

“We've got young couples in Auckland earning a quarter of a million dollars between them who could easily service a mortgage but because of high rents and living costs, they struggle to save a big deposit. It's over $200,000 in deposit just to buy the average Auckland home,” Barnett said.

TailRisk's Harrison released an analysis of the Reserve Bank's proposal, out in June, to bring in debt to income limits. This was a crude tool that did not adequately assess borrowers' debt servicing capacities, and which will perversely target many better quality loans, Harrison said.

Barfoot & Thompson wants to exempt entry-level buyers from tough lending restrictions by allowing them to buy houses with less than 20 per cent deposit, as long as the properties are below a $600,000 threshold.

Thompson said the proposed nationwide exemption would only apply if purchasers lived in the properties. Investors would not be eligible.

“I believe that we need to make it easier for first-home buyers to get into property,” Thompson said, adding that prices had been falling during the winter and the Auckland market was now seeing the effects of trading bank moves and the Reserve Bank's lending restrictions.

Three to four years of huge house price growth were usually followed by a market downturn of six to 12 months, he said. First home buyers would have more opportunities if LVRs (loan-to-value ratio) were relaxed for them and more properties under $500,000 had been sold lately, he said.