Property listings in the Auckland have seen a significant increase in the past week as sales begin to return in Level 1 with end to physical distancing requirements and restrictions on gathering sizes. First time buyers are taking advantage of record low interest rates and loosening of LVR criteria help people invest back into the property market.
Here is what you need to know:
There’s an Appetite For Property as Numbers Return To Market
Property buyers are rushing into the post-lockdown market in droves to take advantage of low interest rates and low prices as demand at auction houses begin to match supply.
The latest residential auction results suggest the property market is settling back to normal trading patterns, with the rapid growth in auction numbers of the last few weeks starting to match the pre-lockdown. The number of properties being offered at auction is continuing to increase after a stagnant few weeks after level 4, and the number of properties sold at auction stood strong alongside the week previous, with 82 sales recorded in both weeks.
It’s not only those buying who are getting a bargain, it seems that properties are holding their own in the auction rooms. Property portal interest.co.nz matched selling prices with rating valuations on the properties that sold at auction last week, 64% of property sold achieved prices that were higher than their rating valuations.
The number of homes being auctioned by Auckland’s largest real estate agency Barfoot & Thompson has also continued to grow with 85 residential properties auctioned in the first week of June, which was an 89% increase on the 45 properties the agency auctioned in the last week of May.
The agency also saw the continued rise in sales as more people return to normalcy under the loosened lockdown conditions of Level 1 with an average sales success rate of 50%, with the City Centre and North Shore having the highest percentage of sales.
As listings and sales begin to get comfortable, many are hoping to see a return of the strong property market that was witnessed before the lockdown. Government Subsidy Extended, Record Low LVR’s Perfect for First Time Buyers In what could have been a move in anticipation for Level 1, the government announced in the days before the Level 1 conformation that it would extend its wage subsidy scheme, and businesses now need to have suffered a smaller revenue decline to be eligible.
Finance Minister Grant Robertson stated that businesses could be eligible for an eight-week extension to the 12-week wage subsidy if they have suffered a 40% revenue loss. Previously, the threshold for the extended subsidy was 50%. This security blanket, alongside record low-interest rates and a stable house market, has made it a perfect time to invest in the property market.
The current LVRs include:
Owner-occupiers require a minimum 10% deposit (maximum 90% LVR).
Owner-occupied construction lending requires a minimum 15% deposit (maximum 85% LVR).
Lending involving investment property requires a minimum 20% deposit (maximum 80% LVR). It includes lending to construction sector as well.
For Welcome Home Loans, requirement is 5% deposit (maximum 95% LVR).
-by Ravi Mehta, from Professional Financial Solutions