New research has revealed 22% of those who said they were definitely going to buy an investment property during the next 12 months would no longer buy if deposits go above 30%.
The findings, from nationwide surveying by Horizon Research, showed another 21% of definite investors said they would delay buying; 34% would still buy and 24% were unsure.
New Zealand’s five leading banks have chosen to implement the banks changes early and now require 40% deposit from property lenders.
was the first to move followed by ASB
Bank New Zealand, Bank of New Zealand and Kiwibank.
New Zealand CEO David Hisco has since called for even higher LVR limits so that 60% deposits will be required of property investors.
“The Reserve Bank wants most property investors around the country to have 40% deposits in future. We think they should go harder and ask for 60%,” Hisco wrote in a NZ Herald article on Wednesday.
“Almost half of house sales in Auckland are to property investors. Taking them out of the market will be unpopular amongst investors but it may end up doing them a favour. Of course this would mean less business for us banks but right now the solution calls for everyone to adjust.”
Horizon Reseach said the new policy will have a slightly greater impact in the Auckland market with 29% of the Auckland respondents definitely looking to buy an investment property saying they would not buy if the deposit required increased above 30%. 17% said they would delay buying, while 27% said they would still buy.
But Harcourts CEO Chris Kennedy has said the Reserve Bank’s decision to raise LVR restrictions to 40% for investors will not stop Auckland and Christchurch’s spiralling house prices.
He says it is aimed at protecting provincial New Zealand’s property market from collapsing and the changes previously made to LVRs in November last year left little lasting impact on Auckland and Christchurch
“This latest measure shows the Reserve Bank’s fears for the rest of New Zealand, which is currently undergoing the ‘halo effect’,” said Kennedy.
“It wants to dampen unsustainable price hikes in the regions.”
Kennedy says Auckland is now a small international city, and investment and immigration will continue to buoy its property market, unlike the rest of New Zealand where large-scale growth and employment is not expected.
Horizon conducted the survey of 1817 adults nationwide in the two weeks ending July 14. Results for “definite” buyers were chosen for the analysis instead of including those who said they “may buy” because Horizon’s research over the past six years on property selling and buying has indicated that the “definite” respondents give a better indication of likely property sales trends.