Northland Property Investors' Association
Wealthier overseas buyers would benefit from the introduction of loan-to-value restrictions on property, says the president of the Auckland Property Investors Association.
LVR restrictions are one of the tools the Reserve Bank is said to be considering to tame the housing market, particularly in the Auckland.
But David Whitburn said governor Graeme Wheeler should not think of it as a magic bullet. “LVR restrictions will make it harder for first-home owners and investors to buy properties in Auckland as they will need to contribute more equity, and many will be unable to do this.”
He said LVR restrictions would slow growth in prices but would help wealthy overseas and New Zealand buyers to purchase properties at good prices.
Andrew King, president of the New Zealand Property Investors’ Federation said LVR restrictions could protect buyers from themselves to an extent.
“In the four or so years up to 2008, banks were aggressively promoting home loans, often without requiring any deposit from the purchaser. This definitely had an effect on increasing demand, but it was also very risky for the banks and the home buyers.”
King said loose lending policies might have lured people into property investment who could not afford it.
“The NZPIF thinks that restricting the LVR ratios will restrict risky investment decisions providing an element of consumer protection, even if it is protecting them from themselves. It may also slow down property price growth, but it will not eliminate it completely.”
King said many investors had enough equity in their own home that increasing LVR requirements wold not stop them effectively borrowing 100% of their new purchases.
Source: Landlords.co.nzcomments powered by Disqus