Michael Yardney is a well respected property investor and commentator on the happenings in the Aussie property market pertaining mostly to investment. A recent article on his website PropertyUpdate may give us a sneak peak at the future of our own property market here in New Zealand.
A property capital gains tax in Australia is not slowing down the property market and now macro prudential controls are likely to be used to ‘target’ investors.
Macro prudential controls are not new – other countries are using them including New Zealand. Britain has just implemented a measure that will restrict lending to borrowers needing loans that are 4.5 times their income to 15 percent of all new loans made by the lender.
New Zealand as you know has an LVR restriction in place. However the macro prudential control Australia is considering is more targeted – it will target ‘investors’ only – not other buyers.
From the article the RBA said:
“The low interest rate environment and, more recently, strong price competition among lenders have translated into a strong pick-up in growth in lending for investor housing – noticeably more so than for owner-occupier housing or businesses. Recent housing price growth seems to have encouraged further investor activity”
So the investors are being blamed for the property boom across the ditch similarly investors are the scapegoat here. However Michael has done his homework and clearly your typical buy & hold investor is anything but high risk!
“Interestingly more than half [of investors] are ahead on their mortgage repayments and seventy per cent of property investors are 40 or over, which is important because the unemployment rate for this age group is very low.
In fact the RBA data shows that investors are typically cashed up, know what they doing and present little risk to the financial system or the economy generally.”
Therefore will Australia gain anything from targeting investors with a macro prudential measure? Michael says maybe in the short term but not in the long term – sounds very similar to what’s been achieved with the property Capital Gains Tax.
If New Zealand’s lenders are to target investors we too may see a surge in the percentage of new loans to investors. We therefore may be getting a sneak peak at our future by watching what’s happening right now in Australia!
This blog article was written for PropertyBlogs by Mobilize Mail.