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New loan restrictions add up to bonus for new dwellings
New loan restrictions add up to bonus for new
dwellings
Tough, new loan restrictions for Auckland property investors is set to boost demand for ‘off the plan’ purchases.
Colliers
International’s national director of residential project
marketing, Peter Evans, says The Reserve Bank’s recent
requirement for a 30% deposit or equity to purchase
established properties will increase buyer demand and appeal
for off the plan projects.
“The deposit required for off the plan buyers is as low as 10%.
“Compared to what, for many, will be an unattainable deposit of 30% for non-new dwellings, the maths is simple as to why demand for off the plan purchases will increase enormously,” says Evans.
“It is good news for Auckland’s construction industry and property developers.”
Evans says because the need for accommodation is so high, new apartments and houses can often be purchased off the plan for less than what it costs to buy established houses in the same area.
The Loan to Value Ratio (LVR) changes may incentivise investors to buy multiple off the plan or new dwellings as opposed to purchasing one established property. This will achieve the Reserve Bank’s aim of taking pressure off Auckland’s established property market by reducing the number of investors and potential buyers at auctions.
“The announced changes to the LVR will mean demand from investors will now focus on off the plan sales and new construction.”
Under the new restrictions, an average Auckland property valued at $800,000 would require an investor to come up with a $240 000 deposit.
Colliers International’s new residential projects such as Botanica in Mt Eden and Alexandra Park in Epsom enable investors to enter the market from as little as $43,000 to $53,000 for a new, one bedroom apartment.
“The deposit for an
equivalent, established investor property in Epsom could
cost up to three times as much, or
$159,000.”
“The fact that off the plan
prices are also set and therefore protecting buyers from the
variables, and often disappointment, of being outbid at
auction is just one more reason to look at this type of
product.
“We expect significant interest in our new to
market developments, Alexandra Park and Botanica, as a
result of these latest Reserve Bank restrictions.”
• Botanica - quality, new, city fringe apartments for as little as $430,000 just a couple of hundred metres from Mt Eden train station and two kilometres from Newmarket, Parnell and the CBD
• Alexandra Park – premium apartments within a mastered planned retail high street village setting in Epsom adjacent to Cornwall Park.
| Purchase Price | Established
dwelling *Equity required 1/10/15 | Off the plan or
new *Possible equity | Saving or
variance Equity requirement |
| $500,000 | $150,000 | $50,000 | $100,000 |
| $750,000 | $225,000 | $75,000 | $150,000 |
| $1,000,000 | $300,000 | $100,000 | $200,000 |
| $1,250,000 | $375,000 | $125,000 | $250,000 |
| $1,500,000 | $450,000 | $150,000 | $300,000 |
Deposit/Equity requirements
ENDS
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