The bright-line rule and LVR restrictions come in this week, but don’t expect any major change in investor behaviour. Investors who have been actively buying rental properties over the last few months have already changed their behaviour so they can continue investing in property.
Banks have been applying the LVR restrictions for weeks and investors have been coughing up their thirty percent deposits for new property acquisitions in Auckland. Investors locked out of the Auckland market haven’t given up, they are now acquiring rental properties in other regions.
NZHerald report Investor activity is up to 33 percent of all new lending.
The Reserve Bank figures for new national residential mortgage lending show that investors accounted for $1.989 billion of lending in August, up from $1.167 billion the previous year.
Kris Pedersen of Kris Pedersen Mortgages says investors are predictably well-informed and they’re taking advantage of the low interest rates wisely.
The bright-line rule may be harder to avoid for some investors. Unforeseen circumstances like illness, loss of income or divorce may force the sale of their properties and thus catching them out. Most investors however buy property for the rental income and typically hold onto their investments for much longer than the two year bright-line rule.
The next few months will be of high interest to the IRD and the RBNZ. All stakeholders will no doubt be analysing every reported statistic keenly.
This blog article was written for PropertyBlogs by Mobilize Mail.