Investors Require 30% Deposit for Auckland Properties
November 10, 2015 at 4:05 PM
Property investors now need a deposit of at least 30 percent for houses in the Auckland market.
The Reserve Bank's move to control speculative activity and reduce inflation in the Auckland housing market took effect from 1 November.
The revamped lending restrictions are intended to curb the rising house prices that are shutting young Kiwis out of the market, by limiting the impact of investors. The new restrictions will have the added benefit of reducing risky bank lending.
"Auckland’s median house price is 60 percent above its 2008 level, and house prices in Auckland have been rising rapidly since late last year,” Reserve Bank Governor, Graeme Wheeler said. “This reflects supply constraints and increased demand, driven by record net immigration, low interest rates and increasing investor activity,” he said.
Banks will still be limited to no more than 10 percent of their lending in the Auckland region to owner-occupiers who have a lower than 20 percent deposit for a house. Elsewhere in the country, that restriction is being eased to 15 percent.
Real Estate industry commentators have said the revamped rules may have some impact, but the problem remains one of too many people chasing too few houses.
Andrew King, president of the New Zealand Property Investors Federation, said more rental properties are needed in Auckland. "The whole 30 per cent thing is aimed at trying to curb house prices but all it will do is reduce the supply of rentals and put prices up," he said.
King said the new rules were already prompting investors to look to other parts of New Zealand.
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