Property Poll: Slump in confidence shows time is up for LVRs

Media release

28 November 2017

Property Poll: Slump in confidence shows time is up for LVRs

Property Institute of New Zealand Chief Executive Ashley Church says that the time has come to dump Loan-to-Value lending restrictions (LVRs) following a dramatic drop in house price growth expectations throughout the country.

His comments, which parallel similar comments made by the Finance Minister earlier today, are backed up by the latest Property Institute poll of public perceptions which shows that most people are no longer expecting big capital gains from housing – and he says that should signal a relaxation in Loan to Value Ratio restrictions.

“We’ve been running this poll for a year now and since last November there’s been a massive swing away from people expecting price rises, with almost 50% picking prices to stay the same and another 25% expecting prices to decrease”.

Mr Church says that In November last year 56% of those polled were expecting prices to rise in the next six months. In November 2017 that figure had dropped to 18%.

“This has been the trend for sometime now, and it’s clearly a reflection of these artificial lending restrictions – so the Reserve Bank should be taking steps sooner rather than later to relax its loan-to-value ratios to ensure the engineered slowdown in the housing market doesn’t turn into an out-of-control slump”.

Even since the Institute’s last poll in August, the number of people expecting price rises has fallen from 30% to 18%, and those expecting price decreases is up by nearly half, from 17% to 25%.

Wellingtonians are the most optimistic for price rises (26%) while the biggest pessimists live in rural areas (31%).  21% of Aucklanders now expect prices to rise, outstripped by those expecting decreases at 27%.

Since the election there has also been big changes in the way that the various supporters of political parties view the property market.

In August, 25% of National voters, 29% of Labour voters, 28% of NZFirst backers, and 63% of Green voters were expecting prices to rise.  The November poll shows the National number down to 17%, Labour down to 16%, NZFirst down 2% to 26% and 27% of Green voters (-33%) are expecting price rises.

Meanwhile, Those expecting decreases are up across the political spectrum. National 21% to 26%, Labour 14% to 27%, NZFirst 14% to 23% and Greens 14% to 21%.

“These sorts of numbers underline the significant mood change that has occurred in recent months and bears out recent statistics showing a flat market in most places,” says Mr Church.

In its November poll the Institute also asked: ‘Overall, do you think the new Coalition Government will have a positive or negative effect on the housing market?’

“Nearly half of those surveyed (49%) believe the Government will have a positive effect on the housing market, more than double (24%) those who picked a negative effect.  15% said the Government would have no effect.  Unsurprisingly, Labour (75%), NZFirst (68%), and Green (72%), were the most positive, with only 21% of National voters feeling that way.

“On the other hand, National voters were easily the most pessimistic, with 47% of them saying the new Government would have a negative effect on the housing market,” Mr Church says.

Ends

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