Agent’s mortgage clampdown fear

SHARE

A respected local real estate boss fears proposed mortgage-lending restrictions could threaten Queenstown’s community fabric making it tough for first-home buyers.

Local Real Estate Institute spokesman Kelvin Collins says many locals will have to rent or quit town if proposed Reserve Bank clamps take effect.

The central bank is poised to insist most home buyers front with minimum 20 per cent deposits to try to cool the country’s over-heated housing market.

In recent times, many Queens­towners have bought their first home with deposits as low as five per cent.

For a $500,000 property, Collins says locals have typically scraped together a $25,000 deposit – about $15,000 from their KiwiSaver savings and another $10k they’ve managed to save.

“There’s a big difference between that and having to find another $80k [for a 20 per cent deposit],” he says.

“There’s very few people who could find that. The whole market recovery started with first-home buyers using KiwiSaver and borrowing 90-95 per cent.

“They were the people who’ve been here five years with a young family that need a house to live in. The market has been soft and they’ve seen an opportunity.”

Collins says a 20 per cent deposit requirement would disadvantage those who can’t borrow off parents – “or someone returning from overseas who’s got a good income, can service debt but hasn’t saved a deposit”.

“The community will feel the effects of it because it will make it difficult for young families to enter the region.”
Collins says people who’d otherwise buy a property will continue renting.

But forcing more people into renting in an already tight market will result in rentals rising, he warns, and people will then find it even harder to save for a deposit.

“They’ll never get into their own home – it’s a bad thing.”

Collins says Queenstown’s community stability will also be potentially undermined: “For the majority of people, if you just rent, you haven’t got your roots down, you don’t feel part of the community.

“You might be here for six months and gone again, or two years.”

The recent spate of first-home buying has helped stabilise the town, Collins believes.

“If you look at it, you’re not getting so many transient skifield workers. Employers would rather have someone who’s got some stability in Queenstown.”

Collins says it’d be unfortunate if Queenstown pays a price for the Reserve Bank trying to cure Auckland and Christchurch housing bubbles: “If you want to solve this problem about house values rising, you’ve got to have more supply.”

Local mortgage broker Mark Pullar isn’t too concerned over the proposed lending clampdown: “In my opinion, banks will still lend with a deposit as low as five per cent to clients they consider lower risk.

“That is going to mean they choose those with a good savings history, clear credit histories and neat and tidy bank statements.

“It might get harder for some to get loans with a lower deposit than it was before, but the door is definitely not closed.”