Relaxed loan-to-value rules may make it easier to get a home loan preapproved, Cotality says. Photo: RNZ
First-home buyers may get a boost through the summer months, Cotality says, as relaxed loan-to-value (LVR) rules make it easier to get a home loan preapproved.
The property research firm has issued its latest housing chart pack. It shows that sales volumes rose in September and were almost 4 percent higher than the same time a year earlier.
New listings were also up, although stock levels were 12 percent lower than the same time a year earlier.
Chief property economist Kelvin Davidson said the market appeared to be stabilising, with conditions in favour of buyers.
"In particular, first-home buyers are showing strong momentum with around 28 percent of activity in September, setting a new monthly record."
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"And with the LVR rules set to loosen from December 1, there may be further opportunity for them to take advantage."
Loan-to-value restrictions limit the amount of low-deposit lending that banks can do.
From December, they will be able to lend 25 percent of new lending to owner-occupiers with a deposit or equity of less than 20 percent, from 20 percent now.
They will be able to lend 10 percent of lending to investors with a deposit or equity of less than 70 percent, from 5 percent now.
Davidson said, while banks were not getting near their limits for owner-occupiers at the moment, the change might make it easier to get preapprovals.
Cotality chief property economist Kelvin Davidson. Photo: SUPPLIED
Banks are sometimes reluctant to issue preapprovals to ensure they stay within their limits.
He said the change would also be helpful for investors.
"The speed limit right now is effectively nothing because it's 5 percent and banks want to keep a buffer between ... what they are actually doing and what they could do so at 5 percent it's pretty tight.
"Doubling the LVR limit to 10 percent I think probably does allow some more finance for investors to come through. Although the debt-to-income ratios are still there, servicing testing is still there. I think there's still a reasonably conservative attitude out there. So it might bring a few investors back but it's probably not necessarily a game changer."
He said the Reserve Bank seemed to be taking its chance to put loan-to-value rules back to an equilibrium.
"They see this as a good opportunity to sort of just put it back to what they think is a normal level for the LVRs to be. Get them back there and just leave them there, I guess."
Davidson said lower interest rates were potentially more important.
Just under half of all loans were floating or due to reprice in the next six months, so the impact of falling rates is likely to be felt quickly.
"All in all, the property market is largely tracking sideways for now - neither booming nor falling sharply.
"With affordability improving slightly, listings lower than last year, more existing borrowers repricing loans down to market interest rates, and the unemployment rate set to drop next year, 2026 may look stronger for both property sales volumes and values," he said.
New Zealand's residential real estate market is worth a combined $1.65 trillion.
"Just because people think it's going to happen doesn't necessarily mean it will happen but it does seem to be starting to become a bit more mainstream that people are thinking conditions are shifting in favour of rising house prices next year.
"You've got affordability back to some kind of normality - not saying it's easy but it's a lot easier than it was - and we've had listings come down. They're still fairly high but they have come down and you have got forecasts now that the economy is going to turn around and I think we're probably seeing some evidence of that already.
"It's pretty conservative out there but as those fundamentals shift around you could also imagine confidence adding an extra layer on top of that."
Price growth was likely to be muted and could be concentrated first in provincial New Zealand, he said.
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