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Speaker 1: Good news back home though from the Housing Department, affordability

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Speaker 1: is near decade best levels. This old value to income

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Speaker 1: ratios fall into seven point two. This is for the

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Speaker 1: December quarter. By the way, movement to in mortgage servicing.

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Speaker 1: It's down to forty two percent of your household income.

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Speaker 1: And for good measure, the deposit hurdle is easing as well.

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Speaker 1: It's down to nine point six years. It was once

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Speaker 1: but that's for twenty percent. It was once a time,

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Speaker 1: once upon a time, thirteen years anyway. Kelvin Davidson is

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Speaker 1: catality's chief property economist and is with us Calvin, good morning.

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Speaker 1: That forty two percent of my forty two percent of

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Speaker 1: my income is on the mortgage now and it used

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Speaker 1: to be hired. Does that money get spread elsewhere and

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Speaker 1: this is good news for the economy?

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Speaker 2: Oh yeah, for sure. Yeah. Absolutely. If you're spending less

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Speaker 2: on your house, you've got a got more cash to

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Speaker 2: spend elsewhere. So yeah, I mean, I think the point

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Speaker 2: is still that housing is cheap. Definitely not saying getting

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Speaker 2: into the housing markets easy, but it's certainly easier than

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Speaker 2: it's spent quite some time, and that will help the

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Speaker 2: wider economy. But there are still some challenges first timed

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Speaker 2: by certainly in terms of the deposit, but once they've

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Speaker 2: cleared that hurdle, actually servicing mortgages is easier than it's

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Speaker 2: been for a while.

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Speaker 1: Let me come back to the deposit in the moment,

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Speaker 1: the forty two percent. Does that take on board people

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Speaker 1: who are also not needing to spend forty two percent?

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Speaker 1: In other words, they are head on their mortgage or not.

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Speaker 2: Yeah, well that's that's that's an average, And yes, we

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Speaker 2: know at the moment there are some people who have

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Speaker 2: made the pretty provent decisions of getting ahead of their

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Speaker 2: loans in terms of when interest rates fail, they keep

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Speaker 2: the payments the same and reduce the terms. So yeah,

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Speaker 2: it includes all sorts, but generally the average has improved

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Speaker 2: a lot.

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Speaker 1: The deposit thing though, at nine point six that these

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Speaker 1: are vrs, the debt to income, are they in the

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Speaker 1: loosening of are they working?

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Speaker 2: Yeah? Well, I mean, I think one thing we've seen

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Speaker 2: through the cycle is that repayment stress has not been

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Speaker 2: a big deal. We haven't seen mortgage e sales, we

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Speaker 2: haven't seen non performance loans, So I think it tells

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Speaker 2: you that credit standards have been to fin this time around,

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Speaker 2: the lvrs and DTIs are helping. Now. The thing about

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Speaker 2: the deposit heard or is still a challenge for sure,

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Speaker 2: but a lot of first time live are giving in

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Speaker 2: without twenty percent deposit. The thing about the olvrs, this

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Speaker 2: is an allowance to end below twenty percent posit, So

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Speaker 2: still a hurdle, but lots of people don't need twenty percent.

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Speaker 2: They're getting on with a lot less. So given what.

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Speaker 1: We've seen, still getting in okay. Given what we've seen, though,

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Speaker 1: it would appear correct me if I'm wrong, it would

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Speaker 1: appear that the days of mass house increases price wise

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Speaker 1: are gone. Given that, and given that that's what in

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Speaker 1: part drives the fear around the size of a deposit,

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Speaker 1: can we not go a little bit looser on the

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Speaker 1: deposit therefore get more people into housing?

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Speaker 2: Yeah? Possibly. I mean there's a bank that is the

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Speaker 2: OLVR rules on first of December, so they didn't actually

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Speaker 2: use the deposit requirement the speed limits, so they said

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Speaker 2: the bank you can now lend more at low deposits.

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Speaker 2: So so and that speed limit is still quite high.

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Speaker 2: We're not we're not really testing there at the moment.

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Speaker 2: So I think there's still a wee bit of caution

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Speaker 2: out there from both banks and borrowers. Still a bit

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Speaker 2: of header and there in terms of low deposit ending,

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Speaker 2: So probably no great pressure on that just yet. But yeah,

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Speaker 2: that's always an option that the bank has.

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Speaker 1: For sure, banks have pulled back on what they think

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Speaker 1: is going to happen wise for houses this year. Does

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Speaker 1: this sort of material change that in other words of people,

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Speaker 1: you know get ahead of steam and we're often running.

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Speaker 1: Does that you know by the end of the year

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Speaker 1: we seeing a better number or not?

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Speaker 2: Well? I think this, I mean, here's the old car analogy.

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Speaker 2: I think this is probably the handbreakers off. But we're

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Speaker 2: not crips on the accelerated yet. I mean, affordability is

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Speaker 2: sort of the neutral. But I don't think it necessarily

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Speaker 2: kickstarts house prices either because there are still restraints. There

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Speaker 2: are things like the DT eyes, but it strats down

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Speaker 2: economy recovering a bit of confidence coming back. I think

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Speaker 2: we will see some growth in house prices, but post

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Speaker 2: COVID boom pretty unlikely. I think you're more looking at

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Speaker 2: single digits rather than double digits.

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Speaker 1: Great stuff, Kelvin, Good to have you on the program.

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Speaker 1: As always, Kevin Davidson out of cautality from trade me

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Speaker 1: this morning. They're asking price, which I'm not a fan

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Speaker 1: of because what you asked when what you get are

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Speaker 1: two different things. Anyway, eight hundred and eighty three this

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Speaker 1: is for February eight hundred and eighty three thousand. It's

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Speaker 1: a sustained three point one percent month on month increase.

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Speaker 1: A lot of places up. The only places I can

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Speaker 1: find a met idiately than to materially down a Hawks Bay,

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Speaker 1: Marlborough and Taranaki. Apart from that, everyone downe North AND's

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Speaker 1: not very good. But the rest of the country seems

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Speaker 1: to be doing okay. And we've got to stop this

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Speaker 1: handbreak thing. How long before because most handbreaks are automatic

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Speaker 1: now therefore we don't apply the handbrake anymore, So how

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Speaker 1: long before we don't go Well, it's the old car

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Speaker 1: analogy with the handbreak. There is no handbreak, so we

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Speaker 1: can't do it. There's still an accelerator. And my next

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Speaker 1: question was is youre caw petrol or electric? Given that's

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Speaker 1: you know, that's front of mind at the moment. But anyway,

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Speaker 1: I'll move on now for more from the mic asking

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Speaker 1: breakfast listen live to news talks.

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