The Reserve Bank and Wellington real estate

It was about a year ago that the Wellington property market started its epic rise. Fast forward to today it’s still on the up. But for how long?

A few local real estate agents are calling the near end of the boom, saying they’ve listed unprecedented amounts of properties for this time of year. Many sellers are said to have quickly listen their homes after the Reserve Bank announced changes to their loan-to-value restrictions (which took effect September 1) back in July.

The bank put the new rules like this:

• No more than 5% of bank lending to residential property investors across New Zealand would be permitted with an LVR (loan-to-value ratio) of greater than 60% (ie: a deposit of less than 40%).
• No more than 10% of lending to owner-occupiers across New Zealand would be permitted with an LVR of greater than 80% (ie: a deposit of less than 20%).
• Loans that are exempt from the existing LVR restrictions, including loans to construct new properties, would continue to be exempt.

Basically what it all means is there are fewer funds to go around, for everyone in all different circumstances. That said, if you do stumble upon that dream home or investment property, it’s still so important to keep your wits about you and give your lawyer (and yourself) the proper amount of time to sort through the formalities to be sure you’re making the right move.

So if you’re making that jump into the market, or continuing your journey, we can help you along the way.