Q+A: Housing market constrained by cautious lenders - CoreLogic NZ

The head of research at property data analysts CoreLogic NZ, Nick Goodall, says tighter bank lending has curbed growth in the housing market over the last few months. 

The latest figures from Quotable Value show housing values nationwide growing at just over one per cent in the last three months and at a rate of 7.3 per cent over the past year. 

Mr Goodall told Corin Dann in this week's Q+A Business Podcast that while there are factors supporting the housing market like strong net migration, low interest rates and shortages of supply, retail banks are being tougher with their lending and testing customers to ensure they are theoretically able to service a seven per cent interest rate on their mortgage.

That's despite most popular two and three year fixed mortgage rates at the moment sitting around five per cent.

Mr Goodall says the bank serviceability tests are the result of uncertainty about where the market is going, after a period of growth. 

He says it means the banks now know they are covered should borrowers roll off their fixed rates in future and face higher interest rate payments. 

The Official Cash Rate in New Zealand is currently at 1.75 per cent and is not expected to increase for a year or so.

However the US Federal Reserve has been hiking its benchmark interest rate this year in response to some inflation pressures and it is possible that this could push up longer-term mortgage rates in New Zealand.

Many retail banks here source capital in offshore money markets.

Corin Dann looks expectations ahead of the budget and speaks to Nick Goodall Head of Research at Corelogic NZ about the outlook for the housing market. Source: 1 NEWS



Shocking admission: WINZ had been using tents to house homeless

In a shocking admission, Work and Income say it has been using tents to house the homeless.

Figures given to 1 NEWS under the Official Information Act show in the last year 20 families have asked for hardship grants through Work and Income to buy a tent to live in.

Work and Income Deputy Chief Executive Service Delivery Ruth Bound said the practise is extremely rare, "so rare in fact that our system does not record the grants as a separate sub-category of hardship grant".

She says it agreed to fund the tents "in an effort to support its clients choices" and did not rule out supplying more than the 20 it could identify.

"Our case managers help clients with one million requests for hardship grants a year and were able to recall around 20 instances," Ms Bound said.

The Government claims it only learnt of the practise when 1 NEWS raised questions and has now ordered Work and Income to stop supplying tents.

"It's not ok for the government to be supplying tents. It might have been acceptable under the past government it's not under ours," said Housing Minister Phil Twyford.

"We're pulling out all the stops with emergency and transitional housing, building thousands of extra state houses, and if people are homeless and don't have anywhere to live we will do our absolute best to find somewhere for them," Mr Twyford said.

National's Social Development spokesperson, Louise Upston, said she too had no idea that special needs grants were being used to buy tents.

"I can only assume these are decisions made by frontline staff who are doing their very best to help people in need," Ms Upston said.

The number of families on Housing New Zealand's waiting list has almost doubled in three years to over 6,000, while there have been one million requests for hardship grants in the last year. 

Ricardo Menéndez from Auckland Action Against Poverty said that it demonstrates we're at national emergency levels.

"The fact that people are having to ask for tents because there is no other option just shows that chronic levels of underfunding for housing sector are starting to affect a large portion of people," Mr Menendez said.

Phil Twyford said, "There's every likelihood the homelessness will get worse before it gets better."

The discovery has prompted the government to step in. Source: 1 NEWS

TODAY'S
FEATURED STORIES

PM receives rapturous applause at Victoria uni announcing end to NZ oil and gas exploration

Jacinda Ardern encountered an approving crowd today at Victoria University as she announced the end to new contracts for offshore oil and gas exploration in New Zealand, after the government was met with some criticism for the move.

Addressing a huge climate change rally at the Wellington university, the Prime Minister received enthusiastic applause throughout her speech which delved into some of the details of her end to oil exploration permits.

Ms Ardern outlined this year's block offer, in which new exploration permits are offered by the government to oil companies, will be limited to onshore acreage in Taranaki alone.

The government will also no longer be issuing any new offshore oil and gas exploration permits.

"This is another step on our transition away from fossil fuels and away form a carbon neutral economy," Ms Ardern said, while acknowledging this announcement alone would not be enough to combat climate change. 

The Prime Minister was also keen to reassure regions economically hit by this announcement they would not be abandoned by the government.

"We've seen before the enormous social damage done in the 1980s due to rapid, uncaring change," she said.

"I'm a child of the 80s. I grew up during a time when this country was going through a difficult economic transition in a very short period of time.

"People lost jobs suddenly, communities were gutted, families were displaced. I saw evidence of that.

"We will not let that happen again on our watch."

Jacinda Ardern spoke to a huge rally on climate change in Wellington today, after launching her historic oil exploration ban. Source: 1 NEWS