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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 385.42-0.3%Dec 8 4:00 PM EST
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From: Elroy Jetson5/14/2015 6:47:00 PM
   of 218272
 
New Zealand's reaction to a real estate bubble is quite different to what we did in the US.

In an exclusive interview with the Herald, Mr Thompson, of Barfoot and Thompson New Zealand's largest real estate brokerage said anyone purchasing a property worth more than $1.5 million should pay a deposit of around $500,000.

'Drop the LVR' The move, he said, would force people to live in suburbs they could afford, "not where they want to be".

He also wanted properties under $500,000 excluded from the LVR (loan-to-value) restrictions to help Auckland's struggling first-home buyers over the line, and admitted the risk of a market correction as prices spiral out of control.

He has lobbied politicians, the Reserve Bank and Real Estate Institute industry leaders over his proposals.

Higher deposits on top-end homes would reduce Auckland's surging prices and the risk of buyers over-extending themselves by making people purchase cheaper houses, he said.

"If they haven't got the deposit they really shouldn't be going up to that next level because at some time interest rates will rise and that's when they're going to over-commit."

Australia stomped on their real estate bubble a number of years ago as well. Not all people find a collapse of an overheated real estate market, coupled with bank failures, to be desirable. Not only did they increase down-payment and tighten loan requirements, they also increased property tax rates and transfer fees for those holding multiple homes for a short duration.
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