Residential Lending Figures Soar as First Time Buyers Continue to Dominate

Mortgage lending figures from the Reserve Bank reveal 2019 soared to new heights as First time Buyers and Investors return to the market in full force. Overseas buyers are selling more residential property than they are buying according to new data from Statistics New Zealand. Here’s what you need to know: Mortgage Lending Reaches New Heights

According to data released form the Reserve Bank, mortgage lending soared to new heights for the month of December, with the amount borrowed up nearly $1.2 billion compared with the same month a year earlier.

The Reserve Bank's latest residential mortgage lending by borrower type figures revealed that the total amount advanced in mortgages last month was $6.536 billion, up from just $5.371 billion in December 2018. The data also revealed that First Time Borrowers are continuing to take advantage of low mortgage rates, with the group borrowing just over $1.2 billion. Investors are also slowly making a comeback, which will please the Reserve Bank, borrowing just under $1.3 billion in December, continuing their slow rise back into the market. These figures follow on from a similarly hot November, when nearly $6.8 billion was borrowed and could indicate that the market is in for a strong summer.

These figures will be much-welcomed good news for the Reserve Bank as they loosened Loan to Value ratio (LVR) restrictions and reduced the Official Cash Rate in 2019 with the hope that it would entice buyers back into the market. Overseas Owners Selling more NZ Residential Properties Than Buying

According to the latest figures from Statistics NZ, there was a dramatic slide in the number of homes sold to overseas buyers last year, with just 0.4% of residential property transfers throughout the country were to overseas owners in the fourth quarter of last year, down from 2.3% in the same quarter of 2018. In the Auckland region transfers to overseas owners dropped to 0.6% in the fourth quarter of last year from 4.9% in the fourth quarter of 2018.

These figures may not come as a surprise to some, as the government made it harder for overseas investors to buy property in New Zealand when they introduced the Overseas Investment Amendment Bill in October 2018, stopping foreigners not intending to live in New Zealand from buying existing homes.

But what may also surprise some, is that the figures showed that overseas owners are selling twice as many New Zealand residential properties than they are buying. In the fourth quarter of last year, overseas buyers purchased 147 residential properties (down from 885 a year earlier) but sold 333 over the same period (down from 414 a year earlier).

However, these figures do not take into account sales where the purchaser was a company or sales made to a trust where at least one trustee is a New Zealand citizen, which could indicate the data is not an accurate reflection of total overseas buyer activity.

- Ravi Mehta, from Professional Finance Solutions