Get In Quick: Lvr Restrictions Kicking In | Impression Real Estate
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Get In Quick: Lvr Restrictions Kicking In

Posted by Impression on 30, Nov 2020

There’s a sweet spot of opportunity to buy an apartment in Auckland right now – but looks as though it will only last until March.

With interest rates at astonishingly low levels, and Reserve Bank loan-to-value ratio (LVR) restrictions not currently applying, apartments remain the most affordable living option in the city.

But this “window of affordability” is rapidly closing. While interest rates remain low, the Reserve Bank is under increasing pressure to reinstate the LVR restrictions to take some of the froth out of the housing market. Banks are taking matters into their own hands, with ASB and ANZ now applying their own LVR restrictions to investors. Westpac, meanwhile, never altered its criteria and has required a 30% deposit throughout 2020, with the CEO saying the bank is “trying to be as cautious as it can”. We can expect to see other banks follow suit.

The Reserve Bank says it is thinking about reinstating the LVR limits in March 2021, at which point it will definitely be harder to borrow.  

“It is possible that this will drive additional activity in apartment sales as buyers try to get themselves on to the property ladder before March next year,” REINZ CEO Bindi Norwell told Stuff.

Right now, house prices have shot up – but these gains are skewed towards the upper end of the market. Apartments have lagged behind on price growth in 2020 due to fewer international students and tourists. This is likely to change quickly when our borders re-open and the threat of coronavirus is no longer hanging over us. We can expect a flood of students and travellers from around the world, driving up prices for apartments. And while apartment owners wait for that to happen, they can get reliable positive cash-flow above what’s available from any savings account at the bank.

Our sales team has apartments available now that can provide positive cash-flow and may also deliver significant capital gains over time; get in touch today.

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