The head of the largest real estate firm in Auckland says restricting bank lending to people with less than a 20% deposit is a welcome development.
The Reserve Bank has ruled that, from 1 October, no more than 10% of the amounts each bank lends on mortgages can be to people with less than a 20% deposit.
Barfoot & Thompson managing director Peter Thompson said he thinks the ruling will have an impact on the housing market but not in the next six to 12 months.
After that, he said there is likely to be a drop in value to make housing more affordable.
Mr Thompson said the new rule will get first home buyers to purchase in an area where they can afford to buy property rather than stretching their funds to the absolute maximum.
At some stage interest rates will go up which he said will put more commitment on the buyer.
Mr Thompson said the average price of an Auckland home has barely changed in the past five months.
Barfoot's average sales price in August of $647,647 was more than $6700 lower than in July and more than $2200 lower than in June.
Mr Thompson said the stability of the last five months follows the rapid increase in house prices in the first quarter of the year.
He said the main improvement in the market in August was a 4.5% rise in new listings compared with July and up 20.7% on August last year, giving buyers more choice.
At the end of August, the agency had nearly 3000 properties on its books, the highest for three months.
Comment
Westpac chief economist Dominick Stephens says Barfoot's figures may possibly be the first sign that the pressure on the Auckland housing market is easing.
He said the Barfoot figures for a number of months have shown very few listings which has constrained house sales and squeezed prices higher.
Mr Stephens said for the first time in a long time the supply of available listings actually rose rather than falling.
"Price action wasn't particularly strong, depending on the measure, there was probably no change in prices in the month of August."
