Home : Research Results : DIR could stop 39% of Aucklanders buying a dwelling
6 Jul 17
39% of Aucklanders think they will not be able to buy homes if the Government gives the Reserve Bank a new power and home lending is limited to five times household income.
Horizon Research finds the preferred debt to income ratio (DIR) of five favoured by the bank in a recent report is the ratio at which those who could probably or easily buy a dwelling (40%) matches the percentage who would find it difficult or would definitely not be able to buy (41%).
The other 19% say “I might be able to buy but might not be able to” in a survey by Horizon Research.
At a DIR of five, in Auckland, 27% said they might or might not be able to buy, 33% felt they could still buy and 39% said they would not be able to.
It also appears that those looking to buy a home to live in, especially in Auckland, believe they would be more affected by Debt to Income ratio controls than those looking to buy an investment property. Putting DIR controls in place could see about 15,000 adults, or 6% of “definite buyers” leave the market.
For those looking to sell an existing house and buy a new one, it could mean an inability to buy, resulting in fewer definite sellers actually put their properties up for sale.
Results are reported for two nationwide surveys of the adult population in July 2016, covering the potential impacts of Loan to Value and Debt to Income ratio policy options.
Samples sizes were 2181 and 2177. At a 95% confidence level, the maximum margin of error for each survey is +/- 2.1%.
Respondents were asked how they would be impacted if the Reserve Bank introduced Debt to Income ratios for mortgage lending (this survey did not ask questions on specific DIR levels).
Respondents were asked what they thought the overall impact would be if the Reserve Bank put in place Debt to Income ratios for mortgage lending.
The Reserve Bank has since publicly discussed a DIR of 5. It says this may reduce the risk of a housing crash. However, at a DIR of 5 significant numbers of buyers could leave the market.
At a ratio of 5, Horizon finds:
The research was conducted in the public interest by Horizon, was subsequently purchased by a national economics consultancy and, along with any update, is available for purchase by others.
For further information please contact:
Grant McInman, Manager, Horizon Research
E-mail: gmcinman@horizonresearch.co.nz
Telephone: +62 21 076 2040
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