Advice to Buyers and Sellers of Real Estate on the North Shore. While the information given on this website is given to the best of our knowledge and in good faith we advise you to contact a solicitor for any legal advice. We are not lawyers.

Housing vs Debt to Income Ratio

John Key and Graham Wheeler have been discussing a debt to income ratio in order to control the rampant Auckland housing market.

There are worrying signs about the real estate market just now. Will John Key and Graham Wheeler introduce a debt to income ratio on all loans in the next budget on the 26th May 2016? They certainly want to control house prices especially in the Auckland market. What is a debt to income ratio? Find out here.

For example, I attended an auction last night and saw a little brick & tile unit in Torbay sell for $741,000 – there were 5 bidders.

Our real estate market seems to know no bounds and continues to surge.

The government and the Reserve Bank are totally focussed on stopping this runaway market and it looks likely they will use a debt to income ratio on all loans.

Whether through a land tax (doesn’t sound like it) or a debt to income ratio which is pretty likely according to Isaac Davison of the New Zealand Herald.  Of course, in the short term this will hurt first home buyers, which is a political hot potato, listen to Mike Hosking talking about this new hurdle for first home buyers here.

Last year, just before the 2015 budget, John Key started thinking out loud about a “bright line test.” Then in the budget, Bill English announced a bright line test along with other controls would take effect from 1st October 2015.

Consequently during July and August of 2015 the market went ballistic as investors tried to lock in their purchase before the 1st October deadline; and then it went very quiet in October and November as buyers figured out their finances. Prices eased until early this year.

If a debt to income ratio is introduced in the next budget, what will be the effect on the housing market?



The Result of a debt to income ratio on house prices?



From the date a debt to income ratio is introduced, it’s quite likely that house prices will fall. It will be more difficult for both first home owners and investors to buy homes. This is great news for buyers in the long term and probably for our economy. But not much good news for you – if you are thinking of selling.

NOW is the time to crystallise the market gains of the last couple of years, before a debt to income ratio is introduced.

NOW is the time to make your move.


Remember, last winter was an excellent time to sell – spring was not so good once the government introduced it’s loan to value regulations.

Whatever your plan is, take advantage of the current market – with high energy buyers wanting to buy to beat any new taxes or regulations.

You really need to talk to your Real Estate Agent right now!


Don’t be a shoulda, coulda, woulda – DO IT NOW.


Give Tony a call on 0800 61 8888.

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