We'll get a more comprehensive blog out in the next few days but the Reserve Bank yesterday announced a new restriction specifically targeting investors and aimed at just the Auckland market.
The key policy changes from yesterday's announcement are as follows:
- Require residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30 percent.
- Increase the existing speed limit for high LVR borrowing outside of Auckland from 10 to 15 percent, to reflect the more subdued housing market conditions outside of Auckland.
- Retain the existing 10 percent speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80 percent.
A few thoughts which I will look to expand on later are:
- Will this push prices up in areas like Hamilton, Tauranga as investors who get locked out of the Auckland market look elsewhere?
- Will this create some buying opportunities for those with higher equity levels as there will be less competition in the market?
- The rule change comes in on the 1st of October. How will the banks approach this between now and then?
- Is the change in increasing the speed limit outside of Auckland actually going to do anything with the banks having a nightmare administering this as it is at the moment?
- With this restriction and the introduction of higher capital requirements still to come in as another restriction aimed at the investor market in July is there an increasing likelihood of an OCR cut?
- What effect could this have on rents?