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Investors in the line of fire

Further targeting investors with tougher lending restrictions, as suggested by the Prime Minister, is misguided, according to an investor advocate.

Wednesday, July 6th 2016, 9:30AM 1 Comment

by Miriam Bell

NZPIF executive officer Andrew King

The latest Quotable Values (QV) data was released yesterday and it showed rapidly increasing values in housing markets nationwide.

Barfoot & Thompson’s June data also came out yesterday and it provided more evidence that Auckland’s prices are on the rise again.

Following the release of the data, Prime Minister John Key said the Reserve Bank had a responsibility to “have a look at the question around investors”.

Asked if the Reserve Bank should extend the LVR restrictions for Auckland investors to the rest of the country and/or further lower the investor threshold, Key indicated he thought it should.

He also said that if the Reserve Bank was going to make changes it should probably get on with it.

This was particularly because there was a risk that people were borrowing and buying rental properties out of fear the Reserve Bank is going to move.

The Reserve Bank has previously made it clear that it is investigating further macro-prudential tools – including more lending restrictions for investors and debt-to-income ratios - to try and reign in the housing market.

This coming Thursday, Reserve Bank deputy governor Grant Spencer is set to deliver a speech on macro-prudential policy and the housing market.

Speculation is high that the speech will contain an announcement about further LVRs for investors.

However, the NZ Property Investors Federation believes hindering the provision of rental properties is misguided.

NZPIF executive officer Andrew King said that, over the past year, landlords have been stung by higher LVR ratios, higher risk weighting requirements and the bright line test.

“There comes a point when you have to ask, if all these measures aren't slowing house price growth perhaps we are shooting at the wrong target.”

QV’s data might show that 46% of Auckland sales are to investors, but around 42% of all Auckland properties are rentals so that is not unexpected, he said.

“The sale of properties to house tenants has always been high… But rental properties tend to turn over faster than owner-occupied homes and therefore make up a higher percentage of overall sales.”

In King’s view, record migration levels, combined with a property supply system that is particularly slow and expensive, are the main reason why prices are going higher.

"With extra costs and restrictions being placed on rental home providers, all we are achieving is higher rental prices which make it harder for first home buyers to save a deposit.

“We are seeing people living in cars and in overcrowded conditions. These people need rental homes not rental price increases".

« Hamilton values skyrocketingTop 10 hotspots set to boom »

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Comments from our readers

On 6 July 2016 at 3:23 pm Igor said:
Very well said...

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 ▼4.14 ▲4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▼3.39 ▲3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 15 November 2019 4:16pm

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