OCR unchanged at 2.5 percent

The Reserve Bank today left the Official Cash Rate unchanged at 2.5 percent.

“House price inflation is high in Auckland and other regions due to the housing shortage, and demand pressures associated with low interest rates and rising net inward migration. Restrictions on high loan-to-value mortgage lending, introduced in October, should help slow house price inflation. Data to date are limited on the effects of these restrictions. We will continue to monitor outcomes in the housing market closely.

And The Governor in an explicit warning, which will very much maintain the widely held view of rising floating interest rates next year, added in the following..“The Bank will increase the OCR as needed in order to keep future average inflation near the 2 percent target midpoint”.

New Builds Released from the 20% Deposit Restrictions

New residential construction loans will now be exempt from the loan-to-value (LVR) restrictions introduced from 1 October, Reserve Bank Deputy Governor Grant Spencer said on Tuesday.

“The Reserve Bank has recently consulted with the building industry and banks on the impact of LVR restrictions on residential construction activity,” Mr Spencer said. “While high LVR construction lending is only around 1 percent of total residential lending, it finances around 12 percent of residential building activity.

A chat with a prominent North Shore Real Estate Agent yesterday revealed an interesting anecdote on the new LVR restrictions affecting 1st Home Buyers. This agent had listed 2 similarly spec’d and priced homes next door to each other, that could of appealed to the 1st home buyer type market. 1 Auctioned prior to the new regulations and 1 straight after.  Numbers through the open homes of the latter were approximately 1/5th of what they had been for the 1st home.

Corner Dairy sells for $1,615,000

A corner dairy in Mangere sold this afternoon at the Bayleys Total Property Auctions for $1,615,000.

To be fair, it was actually three tenancies, a superette, a takeaway, and a liquor store.

Located at 113 Favona Rd rental income was $52,064 p.a. providing a yield of 3.22%.

113 Favona