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Is demand for investment property dwindling?

Even before the reintroduction of loan-to-value-ratio (LVR) restrictions for property investors kick in, at the beginning of next month, there are signs of waning demand for investment property.

Wednesday, March 10th 2021, 6:44PM

From April 1, new investors borrowing from banks will need to stump up a 40% minimum deposit.

Economist Tony Alexander’s latest Spending Plans Survey shows while a net 5% of people say they intend spending more on investment property, this is well down from a net 11% in February and 13% in December. And is the lowest result since this survey started in June last year.

Each month Alexander surveys more than 18,000 people to gauge feelings regarding spending more or less in the next few months, and on what. About 1,200 people responded to his latest survey.

Alexander says the survey results support the view that reintroduction of the 40% minimum deposit for new investor borrowers is curtailing some investment property demand.
“In fact, there may also be support for this investor-specific view from the fact that while the net 4% of people intending to buy a dwelling to live in is down from just over 6% last month, it is not the weakest result on record.”
He says the survey may provide early support for a view the reintroduction of LVR rules is starting to skew the residential property market towards owner occupiers.
“But it is early days and it is not possible on the basis of these results or those in another two surveys – REINZ and ‘Mortgage Advisors Survey’ – to conclude the housing markets around New Zealand are going to flatten out substantially in the near future. There is merely evidence of some frenzy washing away.”
The BNZ says the latest REINZ report, due out this week, will be something the Reserve Bank will be taking into account when it sets its monetary policy.
However, the Reserve Bank says house price inflation won’t be causing it to alter its primary focus on CPI and employment mandates.
BNZ head of research Stephen Toplis says Reserve Bank governor Adrian Orr’s recent speech was clear on this. He, reasonably, asked for stakeholder agreement on what, exactly, is meant by “having regard to” “sustainable house prices” with reference to the new words inserted by the finance minister into the RBNZ’s remit.
But while house price inflation might (still) not be a significant factor in monetary policy it could be instrumental in invoking more macro-prudential policy response, he says. 
“More controls on bank lending are being openly discussed, such as interest-only mortgages. This is on the financial-stability basis of shoring up banks, in the event of a house price correction.
“However, further lending controls could more generally be perceived as the [RBNZ] wanting to kill house price inflation (by means other than monetary policy). Anyhow, it’s a policy space to follow closely,” he adds.

« NZ housing market set to coolHousing crisis needs building surge »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 ▼2.25 2.59 ▲2.89
ANZ 4.44 2.89 3.25 3.39
ANZ Special - 2.29 2.69 2.79
ASB Bank 4.45 ▼2.25 2.59 ▲2.89
Basecorp Finance 5.49 - - -
Bluestone 3.49 3.34 2.99 3.34
BNZ - Classic - 2.29 2.59 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 2.89 3.19 3.39
BNZ - TotalMoney 4.55 - - -
Lender Flt 1yr 2yr 3yr
CFML Loans 4.95 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.40 3.50 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - 2.25 - -
ICBC 3.69 2.25 2.35 2.65
Kainga Ora 4.43 2.67 2.97 3.13
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.20 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.35 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.20 3.24 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.79 2.99 3.29
SBS Bank Special - 2.29 2.49 2.79
Select Home Loans 3.49 3.34 2.99 3.34
The Co-operative Bank - First Home Special - 2.09 - -
The Co-operative Bank - Owner Occ 4.40 2.29 2.59 2.79
The Co-operative Bank - Standard 4.40 2.79 3.09 3.29
TSB Bank 5.34 3.09 3.29 3.45
TSB Special 4.54 2.29 2.49 2.65
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.29 2.69 2.79
Median 4.55 2.73 2.99 2.89

Last updated: 23 April 2021 8:50am

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