*Watch the full interview in the video player above*
The head of one of the county’s major banks says the slow-down in the Auckland housing market is healthy.
BNZ CEO Anthony Healy told Newsroom’s Rod Oram (see video interview above) that recent data showing a slight negative movement in prices was “not a bad thing”.
Healy said there were four main reasons why the market stopped going up.
The first was a lack of affordable houses – a lot of buyers were simply priced out of the market now.
Secondly, the LVR restrictions were having a significant impact particularly on investors.
Thirdly, all the major banks had stopped lending on foreign income which had removed a lot of foreign investors from the market.
Finally, Healy said capital controls in China had cut the number of Chinese buyers in the market.
Healy said the banks “weren’t” panicking about the slow-down but agreed that property developers were now having difficulties in financing some projects.
He said that the absence of second-tier lenders, most of which were forced out of the market during the GFC, meant that developers without strong track records were encountering difficulties getting finance.
He pinpointed cost escalation between the planning and construction stages as another reason for projects being abandoned.
Some apartment developers were now also being impacted by a lack of pre-sales as a result of the market slowdown.