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Harcourts welcomes LVR scrap

Real Estate group Harcourts is praising the Reserve Bank for signalling an end to LVR restrictions.

Today deputy reserve bank governor Grant Spencer said the restrictions have slowed house price inflation by about 2.5 percentage points.

He said the earliest time it will consider beginning to remove them late in the year.

Harcourts chief executive Hayden Duncan says LVR restrictions become ineffectual in Auckland as population increases.

Instead they had the most impact in provincial New Zealand, where the market has never been overheated.

Harcourts figures show the average house in New Zealand now sells for $500,852, up 12% on the same time last year and 13% on September, when LVR restrictions were introduced.

Mr Duncan says restrictions have had little effect on overall prices especially in Auckland and Christchurch, while making it temporarily more difficult for first home buyers to break into the property market.

In Auckland the average sales price now sits at a record high of $700,793. This is up 11% on the same time last year. It is also a 13.5% increase on September 2013 figures.

Mr Duncan says sales agents reported a cooling off by first home buyers in Auckland and Christchruch but overall high demand overall average prices have continued to rise.

“First home buyers are now also coming back into the market and are meeting the 20% deposit requirements creatively, through options such as second tier lenders and family borrowing.”

What do you think? Should the reserve bank remove LVR limits before the end of the year? Click here to vote in our subscriber-only business pulse poll.

Comments and questions

What rubbish. of course the LVR restrictions make a difference to house prices, because they remove some demand from the demand-supply equation.

To say they don't make a difference in Auckland is typical PR cr*p from agents who WANT higher prices (because that leads to a higher number of transactions, and therefore higher commissions). They must think the public are idiots making statements like this.

What is idiotic is the LVR in the first place and Wheeler playing silly games with the OCR. Neither of which aided Kiwis in any way. Made it easier for foreign investors though. Are there any National ministers not sucking up to Chinese interests?

What shallow and judgemental thinking from ANON....he must think all agents swoon around in their expensive cars, live in multi million dollar mansions, buy expensive jewellery and take lots of overseas holidays, a bit like the politicians! ALL the agents I know want to get a good price for their vendor, not to increase their commissions by a couple of hundred dollars, but because that is what we are hired to do! You may or may not be aware that there has in fact been a decrease in sales in the last couple of months...I wonder if ANON actually has any idea how much commission an agent gets out of an average sale?? Stop with the agent hating, we work bloody hard and sometimes for no pay at all!

As long as this Country of ours is subjected to the bottomless pockets of our Asian, Australian and other Country immigrants, there will be no relief for the younger population to obtain a home at a realistic and affordable price. I have competed at auction for some 20 odd homes. In each and every case I have been outbid and taken beyond my financial ability to purchase by Asian bidders. JOHN KEY TAKE NOTICE!!!!!

Can I suggest you waste less time complaining and more time working hard to increase your financial ability?

Either that, or lose your entitlement attitude and look in areas more suited to your finances.

No doubt this is what your more successful over-bidders are doing.

No, the 'successful' bidders have access to cheaper interest rates. Your comments are foolish. There is no level playing field.

Do you know if these were Kiwi Asians or Permanent Resident Asians, or whatever?

If they were ineffectual then Harcourts would be indifferent to them.

"Today deputy reserve bank governor Grant Spencer said the restrictions have slowed house price inflation by about 2.5 percentage points"

Translated to; "Yep, by golly it works so we better get rid of it"

Shame really, as I believe the discipline of having a reasonable deposit is a good thing. Surely?

Mr Duncan should consider what is best for his business over the medium term. A more moderate increase in house prices is surely better and more sustainable than spikes and dips here and there. Not only does it reduce his earnings volatility, but it makes it more likely he will retain his better salesmen (who struggle during the dips).

But no, all he thinks about is this years bonus.

What a fool. He should go back to auctioneering and avoid the laws of economics about which he quite obviously knows nothing.

My own opinion of LVR's is that its taken some of the heat of increasing house prices and of course less houses going for auction particularly in the under $500 bracket and banks require the full value of financed and particulars being lend against. After all it banks money being paid back over a long term.

That said LVR's don't address supply issues which of course affect house values. Councils , Governments and developers ( in my opinion )need to take a team approach to address this and increase overall supply in areas appealing for the particular developments being built & proposed by smoothing out compliance and red tape in order to make it happen.

This is something that is still by being addresed by our current National Government.