ANZ whacks property investors

By in New Zealand Economy

| 18 comments

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.

Unconventional Economist
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Comments

  2. AaronMEMBER

    Does the infestor LVR % matter if it is just made up of EquityMate*TM while the FHB has to have genuine cash savings?

  3. Jumping jack flash

    “…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.

  5. kiwikarynMEMBER

    “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.

  6. The90kwbeastMEMBER

    $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

      • The90kwbeastMEMBER

        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…

      • Narapoia451MEMBER

        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.

  7. Hugh PavletichMEMBER

    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

  8. happy valleyMEMBER

    “… requiring investors to have 40% deposits”

    The Kiwis need to get themselves an irresponsible lending-promoting treasurer like our Josh Rainbowberg?