Investors could be bitten hard this year

Kelvin Davidson

In addition to the reinstatement of loan-to-value ratio (LVR) restrictions next month, property and data analytics company CoreLogic says the Reserve Bank is almost certain to impose controls on interest-only lending to investors as well as put caps on debt to income ratios.

It says New Zealand has only to look at the tighter interest-only restrictions in Australia to realise the significant and lasting impact they have on investors.

The tighter controls are certain to come after rampant demand from investors across the country’s housing market rolled on last month. Investors’ share of overall purchases hovered at a record high of 29%. While first home buyers’ share waned. 
 
CoreLogic senior economist Kelvin Davison says last month’s investor buying numbers will give comfort to the Reserve Bank. Confirming that it was on solid ground reintroducing (LVR) rules, and raising investor deposits back to 40% from May 1.

“The cash investor/multiple property owner figure has remained stable in recent months, at about 12% of purchases. However, some of these may not necessarily be ‘true’ cash buys, as some buyers could have taken on extra debt on other properties in a portfolio.