With New Zealand house prices spiraling out of control, surging 18.4% year-on-year:
New Zealand’s largest home lender ANZ has dropped the hammer on property investors, requiring investors to have 40% deposits:
The country’s largest home lender ANZ says from now it will require investors to have 40% deposits.
This goes further than the recommendations of the Reserve Bank, which is moving to have 30% deposits for investors in place by March…
The RBNZ is currently consulting to reintroduce loan to value ratio (LVR) restrictions, which it removed in May…
The proposal from the RBNZ is to reinstall the restrictions exactly as they were when removed in May. This means 30% deposits for investors and 20% for owner-occupiers…
ANZ has gone further. The 40% deposit level for investors actually aligns to what the requirement was back in mid-2016 when, with more than a hint of desperation, the RBNZ slammed 40% deposits on all investors. It worked. Subsequently these rules were relaxed over the past two years as the heat came out of the housing market…
ANZ’s Managing Director of Personal Ben Kelleher said the bank’s decision followed two months of record levels of mortgage lending.
In those two months some 32.4% of the new mortgage lending had gone to investors, while 18.3% had gone to first home lenders.
“Escalating property prices are putting home ownership out of reach for many Kiwis,” Kelleher said.
“The current settings favour property investors particularly over first home buyers, potentially locking a generation of New Zealanders out of home ownership.
“It’s in everyone’s interests for residential property prices to be sustainable long term, and for home ownership to be accessible to as many people as possible.
Given property speculators are the key driver of New Zealand’s price surge, it makes sense to impose LVR restrictions on them.
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not so mortgage choice bro 😉
Does the infestor LVR % matter if it is just made up of EquityMate*TM while the FHB has to have genuine cash savings?
This.
Its easy when your deposit is mostly made up of a pile of someone else’s debt too, for the case of flippers.
This is the first thing I thought of also.
Nothing like a self financed capital growth driven deposit to find your next purchase and keep the ponzi alice and well.
FHB doesnt have to have any cash savings. They can raid their entire KiwiSaver account, which combined with the Govt FHB grant, is enough for a deposit. Most banks are offering 95% LVR mortgages to FHB as well.
https://www.stuff.co.nz/life-style/homed/first-rung/123016304/minimum-wage-no-help-and-on-the-ladder-at-25-heres-how-they-did-it
“…spiraling out of control…” is very subjective.
I would say their economy is just about to start working as designed.
Fortunately it is just investors. Any self-respecting investor will have or have access to a pile of someone else’s debt to be used for a deposit.
Imagine if a median FHB had to come up with 40% of a median-priced property.
That’s a nice leg up to Non-bank lenders.
“when, with more than a hint of desperation, the RBNZ slammed 40% deposits on all investors. It worked. ”
LOL. Look at that graph and tell me how the LVR’s slowed housing prices from 2016? All it did was slow Auckland down, while investors utilised their Auckland home equity and piled into cheaper regional areas where prices were lower, thus driving up prices for everyone else.
$1m+ houses in Auckland. What a farce. At least Sydney is an actual global city with a diverse and buoyant jobs market. No wonder everyone leaves Auckland and moves to SEQ
But Auckland might be a nicer sh.thole than Sh.tney?
When I was there 7 years ago, so it would be worse now, I was amazed how for a city of 1.4m people there was continual traffic gridlock & a lack of public transport. It’s cold, and everything, literally everything, is expensive…
I lived in Auckland for 12 years – it is pretty much as described here but I will add that it rains for 8 months of the year as well which is miserable. It’s not a shithole, at least not compared to a lot of places in the world, but a lot of the really positive things about living there have been destroyed by the housing ponzi (and everything being expensive due to shipping all the produce to international buyers). I found NZ cheese cheaper in London than in Auckland.
It’s a pity – have a lot of great friends over there but the city is small, rainy, massively overpriced in all ways and doesn’t have the lifestyle benefits of Sydney and its surrounds.
It’s New Zealand’s version of a ‘world city’ – but that doesn’t mean it is a world city.
NEW ZEALAND: WHY IS THE NZ GOVERNMENT EFFECTIVELY ENCOURAGING OPPORTUNIYU DEPRIVED KIWIS TO FLEE TO AUSTRALIA ? …
… as New Zealand housing hyperinflation dramatically widens the ‘affordability gap’ with Australia … note Interest Co NZ just updated Median Multiple Table …
Median Multiple Table – Interest Co NZ
https://www.interest.co.nz/property/house-price-income-multiples
All Editions – Demographia International Housing Affordability Surveys
http://www.demographia.com/db-dhi-index.htm
It would appear that over the past 12 months the unweighted ‘affordability gap’ across the metros has widened (be aware the Demographia Surveys do not include apartments for Australia) from roughly 1.0 Median Multiple to 2.0 … so that now the $100,000 household income unit in New Zealand can expect to pay about $790,000 while the Australian one can expect to pay about $590,000.
As a ‘check measure’ consider the Total Usually Occupied Dwelling Stock Value to GDP Ratios for both countries too.
Australia is about 3.6 times ($7T / $1.9T … New Zealand approaching 4.6 times ($1.4T / $0.3T).
These basic structural measures were discussed nearly 10 years ago within an Australian SMH / The Age article …
House Prices Out Of Sync With Incomes … SMH / The Age
http://www.performanceurbanplanning.org/sydneymorningheraldarticle.html
UPDATE …
NEW ZEALAND’S LARGEST BANK … ANZ BANK : BUILD OUT OF THIS DESTRUCTIVE HOUSING BUBBLE OR BUST OUT OF IT…
… WITH THE UNSTOPPABLE NEW ERA OF COVID ACCELERATED ‘DECENTRALIZATION AND DISPERSAL’ (WORKING FROM HOME; WORKING FROM ANYWHERE; REMOTE WORKING) … THE MARKET CHANGES ARE HAPPENING ABOUT 8 TIMES FASTER THAN THE 2007 SEVERE RECESSION … refer http://www.PerformanceUrbanPlanning.org …
… BUYERS ARE NOW THE URBAN PLANNERS. WHAT THEY WANT THEY WILL GET … ANYWHERE …
ANZ housing report says urgent action is needed to make housing more affordable including ramping up supply and curbing immigration … Greg Ninness … Interest Co NZ
https://www.interest.co.nz/property/108418/anz-housing-report-says-urgent-action-needed-make-housing-more-affordable-including
ANZ’s latest New Zealand Property Focus report says a co-ordinated government policy response, which could include curbing immigration, is urgently needed to rein in the over heated housing market and ease acute housing unaffordability.
Written by the bank’s economics team, the report doesn’t mince its words. … read more via hyperlink above …
.
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… The public has long understood the need to deal with the housing crisis … as the quarterly IPSOS Issues Monitors clearly illustrate …
The IPSOS New Zealand Issues Monitor – November 2020
https://www.ipsos.com/sites/default/files/ct/news/documents/2020-11/12th_ipsos_new_zealand_issues_monitor_nov_2020.pdf
“… requiring investors to have 40% deposits”
The Kiwis need to get themselves an irresponsible lending-promoting treasurer like our Josh Rainbowberg?
that’s unAustralian
Will it make a difference if implemented in Oz? Infestors have retreated.