tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Tuesday, May 17th, 8:01PM

News

rss
Latest Headlines

Investors under fire

Rising house prices and the minimum rental standards debate have left investors under heavy fire – and all eyes on the Reserve Bank’s upcoming Financial Stability Review (FSR).

Monday, May 9th 2016, 1:00PM

by Miriam Bell

The past week has been a rough one for investors who have been blamed for both surging house prices nationwide and tenant health problems due to substandard rental properties.

While the wait for the release of data which should indicate the extent of investment on the part of overseas buyers continues, domestic investors have taken centre stage again.

Westpac chief economist Dominick Stephens said house prices are rising in locations with diverse population growth rates and no evidence of accommodation shortages.

“Talk of supply shortages and recalcitrant councils must now take a back seat in the house price debate.”

Instead attention is turning to sources of housing demand, he said.

“The finger is being pointed directly at investors, who are experiencing low borrowing costs and/or low returns on other investment options, due to low interest rates.”

There can be little doubt investors are very active in the current market, including in Auckland.

According to CoreLogic, the most active group of property buyers, particularly in Auckland, are those who own multiple properties - mostly investors.

CoreLogic’s most recent buyer classification data show that this buyer group’s share of sales increased from 35% in 2013 to a peak of 40% in the second half of 2015.

However, popular perceptions of exactly who investors are and what they do seem exaggerated.

It appears many hold the view that investors are either slum landlords who make huge profits from their rental properties or dedicated property flippers who are not taxed on their gains.

Yet this is not usually the case.

For example, Auckland Property Investors Association vice-president Peter Lewis told media over the weekend there is a misconception that landlording is a big business.

He said they have done studies and found that over 73% of New Zealand landlords own either one or two houses.

“Only 500 landlords in New Zealand own more than 10 rental properties, so you are dealing with a ‘ma and pa’ business.”

Meanwhile, as landlords.co.nz has reported, those who buy property with the intent to sell are taxed on any profit they make.

None the less, speculation is growing that the Reserve Bank will announce further macro-prudential policy, in another bid to calm the housing market, as part of the FSR on Wednesday.

Westpac expects the Reserve Bank will discuss its macro-prudential options in the FSR, Stephens said.

Such options include requiring banks to hold more capital, strengthening the current LVR restrictions on mortgage lending, or introducing new restrictions on mortgage lending like a maximum debt-servicing-to-income ratio.

“We would be mildly surprised if the Reserve Bank committed to any of those options as early as next week,” he said.

“However, we do expect them to announce some form of macro-prudential tightening before the year is out.”

ASB senior economist Jane Turner said the Reserve Bank may opt to continue to watch and wait at this point as it can tweak the rules anytime, not just at a FSR.

“But renewed tensions between monetary policy and financial stability suggest the odds are growing of further tightening in Auckland investor restrictions and potentially a broadening to nationwide investor restrictions.”

« Strategising for a changing populationFree Investment Property Showcase Events: Auckland, Wellington and Christchurch »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Brian Gaynor dies
    “RIP - a true icon and such a humble person who helped so many....”
    1 day ago by p simone
  • Brian Gaynor dies
    “Very sad. Condolences to him family....”
    1 day ago by sanet.drury@gmail.com
  • Brian Gaynor dies
    “Brian was someone you would always go and listen to if he was presenting at a seminar or conference, someone you would always...”
    1 day ago by MikeBeuvink
  • Brian Gaynor dies
    “A true champion of the industry. My sincere condolences to family, colleagues and friends. ...”
    1 day ago by Pragmatic
  • [GRTV] AIA rolls out direct life insurance plans
    “Thanks Lifeadviser1, and it is great to see you have been having a play in the system. You are right, in the original...”
    1 day ago by Sam.Tremethick
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
Lender Flt 1yr 2yr 3yr
SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

Last updated: 16 May 2022 9:03am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com