Barfoot and Thompson, the leading residential agent in Auckland is lobbying for first home buyers be exempt from LVR lending.
REINZ reports there are many households who earn $250k between themselves and can easily service a mortgage, yet have difficulty coming up with a deposit.
Barfoot & Thompson has proposed that exempt entry-level buyers should be allowed to purchase houses with less than 20 per cent deposit, provided the properties are below a $600,000 threshold. But a $600,000 price cap would not help Auckland buyers, as there was little available in that range.To be honest, you have to look hard to find a property under $600,000 in Auckland, unless you start dabbling into apartments.
What will probably happen is there will be a surge in demand for houses in the below $600,000 (most likely apartments). As we all know, from basic economics 101, if there is a huge increase in demand (while supply is fixed), it won’t be long before we run out of houses less than $600,000.
If the deposit exemption is going to have any benefit for Aucklanders, the limit should be $800,000. There are still a fair amount of decent 2 bedroom units selling for under this price.