With the wage subsidy also expiring in September, Kiwis could be in for a “spring of discontent”
With the wage subsidy scheme expiring in September and an impending general election, Century 21 New Zealand owner Derryn Mayne says extending mortgage holidays is a “no brainer,” as homeowners are still very likely to need the support.
Mayne noted that almost 60,000 Kiwis had taken up the mortgage holiday scheme as of 30 June, while a further 79,000 had reduced their payments on home loans, debt or personal lending. Finance Minister Grant Robertson recently confirmed that the government is actively considering extending the six-month scheme, and Australian banks have already committed to extending their own payment deferral scheme by four months.
Read more: Reserve Bank considering extending mortgage holidays
Mayne says the wage subsidy has been a significant help to businesses, but with it coming to a firm end in September, the removal of the mortgage holiday scheme could result in a “spring of discontent.”
“Having supported over 1.7 million jobs, the hugely successful wage subsidy scheme comes to an end on 1 September,” Mayne said.
“We have a general election on 19 September which always sees real estate activity slow, then on 24 September the mortgage holiday scheme is due to expire. This could be a spring of discontent for thousands of Kiwis, but it doesn’t have to be.”
Mayne says that despite negative forecasts throughout March and April, the New Zealand real estate market has held strong. However, she says those forecasts still have time to be proven right, and extending payment deferrals would go some way in avoiding a “perfect storm.”
Read more: RBNZ praises banks’ “strong” COVID response
“Industry statistics show median house prices across New Zealand are well up on last year and most regions are still experiencing price lifts month to month,” Mayne explained.
“REINZ also reported the highest number of new listings and properties sold for the month of June in four years.”
“Real estate is defying any negativity and that’s great for overall business and consumer confidence,” she concluded.
“A perfect storm is now on the horizon, but we still have time to avoid it. The Government, Reserve Bank and retail banks acted decisively back in March. We need that same bold leadership again, and soon.”
