Author: webmaster

How Will Rising Interest Rates Impact Real Estate Markets in 2021?

COVID-19 triggered a global economic recession in 2020, and central banks across the globe reacted by slashing interest rates – a standard practice to prop up liquidity and stimulate the economy. More than a year later, regulators are still holding off on hiking the rates back up due to the continued effects of the pandemic. […]

Managing the risks of cost escalation

The Knight Frank Global House Price Index shows that global house prices lifted 7.3 per cent in the year to March 2021, and New Zealand had the second fastest growth globally with a 22.1 per cent increase. Property developers looking to take advantage of the favourable market conditions have ramped up residential building activity with […]

Rates and fees in the Development Finance Lifecycle

Property Finance in New Zealand “What are your rates and fees?” is perhaps the most frequently asked question by clients approaching ASAP property finance specialists for a construction loan. However, many developers do not take the time to consider how these costs are incurred over the life cycle of the property development project. Unless you […]

Housing Price Rise Triggers Government Response

New Zealand Finance Minister Grant Robertson now requires the Reserve Bank (RBNZ) to consider the impact its monetary policy decisions have on house prices, following a revision to RBNZ’s remit. This has created some significant ripples in the property finance sector. While the Government’s Monetary Policy Committee’s main objectives remain unchanged (targeting inflation and employment), […]

How the new LVR restrictions will impact lending

As has long been forecasted, the Reserve Bank of New Zealand (RBNZ) has now moved to reinstate higher Loan to Value ratios(LVRs). There were no restrictions last year, meaning buyers could potentially purchase a home while putting down a smaller down payment. However, the property market has since boomed, prompting the RBNZ to consult interested […]

A Property Developer’s Guide to the National Policy Statement on Urban Development 2020

New Zealand recently adopted a major change in urban environment planning that is expected to lead to significant upturns in the world of property finance. Gazetted on July 23rd and pushed into effect on August 20th of 2020, the National Policy Statement on Urban Development (NPS-UD) is an evolution on previous government documentation surrounding development […]

Breaking Down Loan-to-Cost Ratios in Development Finance

There are two key components to any initial loan assessment for development finance: a loan-to-value ratio (LVR) and a loan-to-cost ratio (LTC). Both are mathematical formulae, and both contribute to the success of your application. We have discussed LVRs in a previous blog post. Here, we break down the intricacies of its counterpart: LCRs.   If you’re readying yourself to apply for development […]

What Unconventional Monetary Policy Means for Investors

COVID-19 has caused widespread disruption across global markets resulting in job losses and economic hardship. In response, countries across the globe have been implementing economic policy to soften the blow of the current crisis. In New Zealand, the Reserve Bank’s response was swift, immediately lowering the OCR from 1% to 0.25%, and announcing (what would […]

Market Update and Impact of General Election

The past few months have been a wild ride for those involved in Property Finance. It was only a few months ago that NZ was reeling from nationwide lockdown and mainstream economists were predicting house price declines between 7 and 15 per cent.  However, the New Zealand housing market has fared far better than expected, and many economists and lending institutions (including the RBNZ) are now having to revise their forecasts upward.   It would seem that the strength of the government’s fiscal […]

Loan to Value Ratios: What You Need to Know

The loan-to-value ratio (LVR) is one of the most common and widely used metrics in the world of property finance. For financiers, it is broadly used to manage and mitigate credit risk when creating a loan facility. For property developers and investors, understanding LVRs and their application in credit analysis will provide insight as to the likely challenges you will face when seeking a loan, as well as assist in identifying the best finance partner for your project.   It is important to remember that the simple loan-to-value […]