Colliers International New Zealand is pleased with the Reserve Bank’s decision to extend its higher loan to value ratios exemption on new-build houses, besides off-the-plan projects and bare land for development.
National Director of Residential Project Marketing Pete Evans says at a time of an extreme housing shortage, it is encouraging to see different organisations come together in a unified approach to Auckland’s housing woes.
“We were pleased to see the Property Council’s work with the Reserve Bank on excluding higher loan to value ratios on new houses. The Reserve Bank’s exemption for off-the-plan projects and bare land for development means lower deposit requirements for purchasers of newly built homes,” says Evans.
“We support Property Council’s call for the exemption to be extended to new houses supplied to the market by builders and contractors, most of whom typically buy serviced sections from developers and subsequently build dwellings to offer to the market as housing packages,” he says.
According to the Property Council, the Reserve Bank will use the term developer in a broad sense, with the intention of including builders as well as developers who also offer house packages. The Reserve Bank is expected to provide retail banks with further clarity on this issue.
Will Coates, Colliers International Project Manager of Residential Project Marketing, says the move comes at an appropriate time. The Independent Hearing Panel (IHP) on the Unitary Plan put Auckland’s current shortfall at around 40,000 homes and an additional 13,000 homes per year over the next seven years.
“Through painstaking work, the Reserve Bank, Auckland Council and the Independent Hearing Panel on the Unitary Plan and the Property Council are paving the way to bring more supply into the housing market,” Coates says.
“But we are concerned about the ongoing critical lack of economies of scale to meet the need for the 91,000 dwellings Auckland needs over the next seven years. We encourage New Zealand’s main banks to maintain funding support to established and emerging developers in Auckland’s market,” Evans says.
“At the moment, banks seem to be cautious about lending to ‘new’ residential developers. However, to get momentum and more houses on the ground in Auckland, we hope financiers can find a way to offer more support to emerging developers,” Coates points out.
Any change in bank lending policy to developers may restrict future supply and could ultimately increase prices for newly built houses and apartments.
Colliers International strongly supports collaborative and ongoing dialogue between retail banks and existing and new development operators, to better bridge the gap between the two sectors - both of which are fundamental to the success of New Zealand’s housing sector.