Banks see some renewed activity from housing investors after rate cuts

Personal Finance / news

The country's banks are reporting early signs of a rebound in activity from property investors and demand for mortgage lending from both owner occupiers and investors is expected to continue to increase during the next six months

21st Oct 24, 11:32am by David Hargreaves

Source: 123rf.com

The country's banks are seeing early signs of "a rebound in activity" from housing investors following the recent interest rate cuts.

This is one of the observations the Reserve Bank (RBNZ) makes in its latest Credit Conditions Survey. The six-monthly survey seeks the views of 15 NZ-registered banks, including the big five, on both reported and expected credit availability and demand. The latest survey was completed in September 2024 and covered credit conditions observed between April 1, 2024 and September 30, 2024 and asked how banks expect conditions to evolve over the next six months.

Aggregate indicators are constructed by assigning each response a score between -100 and 100. A positive score indicates that banks observed (or expected) an increase in credit demand or availability, or tightened their lending standards, and a negative score indicates the opposite.

Banks reported increases in the availability of residential mortgage credit over the past six months, as banks reduced their mortgage serviceability test rates after the first cut in the Official Cash Rate (OCR) in August.

"Banks expect further increases in credit availability for households during the next six months as they expect further interest rate reductions," the RBNZ said in its summary of the results.

While overall residential mortgage demand had fallen over the past six months, some banks had noted an increase in credit demand following the recent reduction in lending rates.

"This includes early signs of a rebound in activity from property investors," the RBNZ said.

"Demand for mortgage lending from both owner occupiers and investors is expected to continue to increase during the next six months due to further expected reductions in interest rates and the recent easing in restrictions in loan-to-value (LVR) ratios."

In terms of what's happened in the past six months, banks had reported a further increase in the availability of residential mortgage credit, with a further easing expected during the next six months. However, as mentioned above, demand for residential mortgage lending had actually decreased again during the period, continuing the trend seen since mid-2021.

The RBNZ said some banks had reported that the activation of restrictions on debt-to-income (DTI) ratios has required additional documentation from borrowers to ensure compliance with prudential requirements.

The relaxation of Credit Contracts and Consumer Finance Act (CCCFA) affordability requirements, which relaxed full expense verification when assessing applications, "has mostly sped up loan processing rather than eased credit availability".

Demand for new commercial property lending for investment purposes increased.

"Banks are seeing continued interest in investing in high quality offerings such as prime office space," RBNZ said.

Demand for property development remained subdued, with high borrowing costs and strong inflation in construction costs placing pressure on developers’ margins, limiting the number of feasible projects, the RBNZ said.

"Many housing developers are holding on to land until market conditions improve. Expectations of further reductions in interest rates and stabilising house prices are expected to support a recovery in development activity during the next six months," the RBNZ said.

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90 Comments

by huttman | 21st Oct 24, 11:57am 1729465039

oh well, a road to normal. not a road to another boom.

by yeahrightmate | 21st Oct 24, 12:11pm 1729465887

Yes but "normal" won't do around here sorry. It's either the dead cat bouncing or the beginning of another trip to the moon for the property market. Either way or if nothing at all really happens...each camp will fight pointlessly on this forum and keep us entertained!

by Pa1nter | 21st Oct 24, 12:15pm 1729466133

It's "my dad's bigger than your dad" for adults.

by Advisor | 21st Oct 24, 12:58pm 1729468709

Speculator: "I worked hard and have earned every dime of my untaxed capital gains. My multimillion-dollar portfolio is a function of my intellect and has nothing to do with a market built to favour wealthy asset owners. How dare you think otherwise."

Renter: "The market is unfair, banks are greedy, but I will take the full approved loan amount no questions asked to outbid others on every house in town that I would not be able to afford if not for the broken financial system. Surely being impulsive and applying zero logic to the most important financial decision of my life makes perfect sense."

by Halfway To Paradise | 21st Oct 24, 2:10pm 1729473044

I am the Dad, and what I say goes.

by sgtshortcut | 21st Oct 24, 12:26pm 1729466799

Ah the mighty keyboard warriors defending the Spruikers or DGM’s…it has moments of hilarity, & moments of tediousness, when I studied economics I remember loving how you can easily cherry pick data to create a narrative that best fits the desired outcome of the report you’re working on…that’s much the same as this chat forum 😂

by Nzdan | 21st Oct 24, 12:47pm 1729468066

Look at you moral grandstanding over the Interest.co comments section. Watch out spruikers and DGM's, this fella studied economics.

by sgtshortcut | 21st Oct 24, 12:51pm 1729468306

Hey…maybe I cherry picked the data to fit my narrative…I could’ve been referring to my 5th form economics class…🤷🏻‍♂️😂

by Toye | 21st Oct 24, 1:08pm 1729469296

NCEA level 3 Economics?

by sgtshortcut | 21st Oct 24, 1:12pm 1729469531

Caught out showing my age with a “form” level reference

by RookieInvestor | 21st Oct 24, 1:27pm 1729470445

Caught out showing my age with a “form” level reference

As is Toye, 5th form would be level 1 NCEA.

by ChrisOfNoFame | 22nd Oct 24, 1:42pm 1729557729

"you can easily cherry pick data to create a narrative that best fits the desired outcome of the report you’re working on"

And therein lies the problem, and it's the same trap that people using A.I. fall into. The problem of course is that the people that have studied & understand the subject quickly recognize the cherry-picking. Sadly for public discourse, the number of people that actually have studied & understand the subject is far, far fewer than those that think they do.

by tothepoint | 21st Oct 24, 1:45pm 1729471536

Hi yeahrightmate,

Suggest you temper your enthusiasm with reality.......

There's no impending boom in the property market. And there's no impending crash.

There're an increasing number of reports that market buoyancy is climbing a bit - most recently spurred on by the recent cut in the OCR and widespread speculation that it will be cut again next month.

But let's wait and see, the road to recovery will have a few potholes and sharp bends - plus the odd bandit - along the way. Very little chance of a linear recovery in the foreseeable future.

TTP

by J.C. | 21st Oct 24, 2:08pm 1729472931

There you go TTP. Not too hot, not too cold. The Goldilocks narrative.

by Thats All Folks | 21st Oct 24, 12:06pm 1729465564

Bit like the election optimism, another dead cat bounce for the last of the lemmings…

by Yvil | 21st Oct 24, 12:22pm 1729466571

So a dead lemming bounce really you think ? Just make sure you don't end up being a lemming yourself, with your thinking.

by ex agent | 21st Oct 24, 12:34pm 1729467269

They must be looking for capital gain as they certainly cannot be looking for income.

by Averageman | 21st Oct 24, 12:35pm 1729467329

Yep and why they should have a lower DTi threshold.

by CN - new | 21st Oct 24, 2:04pm 1729472646

"Yep and why they should have a lower DTi threshold."

Here are some of the advantages that non owner occupier buyers have over owner occupier buyers (& can then outbid owner occupier buyers in the existing dwelling ownership market):

1) interest deductibility

2) higher debt to income borrowing limits (7x DTI vs 6x DTI)

3) 100% financing (due to equity recycling techniques) vs 80% financing for owner occupier buyers

4) interest only financing

5) buyer syndicates combining their borrowing power

Is it really any wonder that home ownership rates have fallen from their highs and there is a housing affordability issue in both the home ownership market and the rental market, leading to:

1) higher number of renters per household (to pay higher rents to landlords) compared to number of residents in owner occupied households.

2) higher amounts paid by governments for accommodation supplements

3) higher number of households requiring social housing

4) high numbers on social housing wait lists

5) higher number of households requiring emergency housing

6) higher numbers of homelessness, and people sleeping in their cars

7) more households choosing to have children later

8) increased wealth gap between asset owners and non asset owners (and the social issues and consequences of that)

If non owner occupier buyers were incentivised to build or enter into the new build market (and away from the existing residential dwelling market), that would increase the number of residential dwellings for households.

The tax policies of the previous government were pro-owner occupier in the existing residential dwelling market and attempted to level the playing field for owner occupier buyers against non owner occupier buyers.

The tax policies of the current government are pro-non owner occupier in the existing residential dwelling market.

by JimboJones | 21st Oct 24, 2:16pm 1729473363

Wouldn’t most of those problems be worse if housing wasn’t an attractive investment? We’d be building even less houses wouldn’t we?

by CN - new | 21st Oct 24, 2:20pm 1729473632

"Wouldn’t most of those problems be worse if housing wasn’t an attractive investment? We’d be building even less houses wouldn’t we?"

Can you please explain your perspective and line of thinking further.

by huttman | 21st Oct 24, 2:18pm 1729473526

Here are some of the advantages that non owner occupier buyers have over owner occupier buyers (& can then outbid owner occupier buyers in the existing dwelling ownership market):

1) interest deductibility

2) higher debt to income borrowing limits (7x DTI vs 6x DTI)

3) 100% financing (due to equity recycling techniques) vs 80% financing for owner occupier buyers

4) interest only financing

5) buyer syndicates combining their borrowing power

most of your points are not valid.

point 2, true investors have higher DTI, but investors also have a different LVR requirement.

point 3, because there is a overall LVR restriction, '100% financing' is simply never going to happen.

point 4, homeowners can have interest only too, it's not limited to invetors.

point 5 syndicates borrowing power, again, with LVR, it's not really a thing. investors seem to have higher buying power because they've put down some capital.

by CN - new | 21st Oct 24, 2:38pm 1729474689

point 2, true investors have higher DTI, but investors also have a different LVR requirement.

Yes. Non owner occupiers have lower LVR compared to owner occupiers. The equity deposit is being financed by equity release, deposit recycling techniques, resulting in zero cash deposit by non owner occupier buyers.

point 3, because there is a overall LVR restriction, '100% financing' is simply never going to happen.

point 5 syndicates borrowing power, again, with LVR, it's not really a thing. investors seem to have higher buying power because they've put down some capital.

Equity release, deposit recycling technique explained here.

"Many investors buy investment properties with $0 cash. How? They borrow the deposit against properties they already own.

I call this the “No-Cash-needed Method”. So, no, you don’t need $120,000+ in cash to buy an investment property.

In this article, you’ll learn how you can use equity to buy a second property with $0 cash."

https://www.opespartners.co.nz/mortgage/useable-equity

by huttman | 21st Oct 24, 2:49pm 1729475352

question, if a homeowner already has a home, can it borrow 100% to buy another house to live in?

question 2, investors buy properties using existing equties, does it mean investors buy houses with no expenses?

you are what they called cherry picking facts to validate your own narratives. Rich people do have more options, that's not because they are rich. first home buyers find it hard, because they are not rich yet.

by CN - new | 21st Oct 24, 2:59pm 1729475989

question, if a homeowner already has a home, can it borrow 100% to buy another house to live in?

Under certain conditions, yes. Ask your mortgage broker how.

question 2, investors buy properties using existing equties, does it mean investors buy houses with no expenses?

Irrelevant to the original point being discussed of 100% financing, zero cash down for non owner occupier buyers.

by huttman | 21st Oct 24, 3:08pm 1729476534

you have misunderstood the advantages of investors vs home buyers (more likely first home buyers in your context).

the advantage for investors rooted from the equity they have, not the investor identity.

by CN - new | 21st Oct 24, 5:07pm 1729483671

"the advantage for investors rooted from the equity they have, not the investor identity. "

It would be great if those who have equity to invest and non owner occupier buyers who want to buy and invest in residential dwellings to build or buy new builds so that there are more residential dwellings for residents in NZ.

by two_pair | 22nd Oct 24, 8:10am 1729537808

We had that, then the people voted back in 7 house Luxon and his buddy Seymour

by ChrisOfNoFame | 22nd Oct 24, 1:51pm 1729558316

You've overlooked CN's first point.

1) interest deductibility

Which is part of a critical point CN didn't list ...

6) carried over losses to offset future tax

And no. I'll not be responding further on this as I have already done so ... numerous times! (Go see an accountant if you don't believe me.)

by kiwikidsnz | 21st Oct 24, 3:20pm 1729477203

"Is it really any wonder that home ownership rates have fallen from their highs"

2023 Census data shows home ownership has increased and housing quality has improved, according to statistics released by Stats NZ today.

Around two-thirds of households in Aotearoa New Zealand (1,175,217 or 66.0 percent) now own their home or hold it in a family trust, compared with 64.5 percent in 2018.

https://www.stats.govt.nz/news/home-ownership-increases-and-housing-qua….

by CN - new | 21st Oct 24, 3:33pm 1729477984

Yes, the rate is increasing in recent years in some areas.

https://tradingeconomics.com/new-zealand/home-ownership-rate

https://www.rnz.co.nz/news/national/432369/homeownership-rates-lowest-i…

From your link above:

Home ownership remains lowest in Auckland region

In 2023, Auckland had the lowest rate of home ownership of all the regions, at 59.5 percent, which was largely unchanged from the 2018 rate of 59.4 percent.

by GoWokeGobroke | 21st Oct 24, 10:16pm 1729502174

@ CN - "Home ownership remains lowest in Auckland region".

Of course it is, Auckland is the most desirable city to live in the entire country, and subsequently the most expensive place to live as well. Why ever would one just starting out expect to buy in NZs most desirable city? You work up to the top, you don't expect the top.

That's like expecting a Lambo as a first car. It's just entitlement - "I want house in the most desirable city in the country, and I want it now, and I don't want to settle for anything else". When one is just starting out one can't have it all, and have it now, just because people tell one they're special and can have everything they want just because they want it. Life doesn't work that way.

First home buyers need to be far more realistic of their expectations. This may mean looking outside of Auckland to purchase, or it may mean making other sacrafices for a little longer to be able to achieve ownership in Auckland.

by CN - new | 22nd Oct 24, 12:26am 1729509998

When employees in essential services find housing unaffordable, they will move to more affordable locations.

Who will provide these services for you if these employees move out of Auckland due to a lack of housing affordability? Police, fire, ambulance, nurses, medical support workers (hospital admin, hospital orderlies, hospital cleaners, etc), aged care workers, pharmacists, postal delivery, plumbers, electricians, warehouse workers surrounding food distribution, supermarket workers, butcher, bakery, teachers, bus drivers, delivery drivers, car mechanics, rubbish collectors, sewerage treatment workers, lifeguards, utility workers at gas, water, electricity, telephone companies, etc. Then there are the other discretionary spending areas - cafe / restaurant workers, retail, etc?

And all those employees who service the tourism sector - entertainment venues, car hire companies, hotel and motel workers, cleaners, etc

by CN - new | 22nd Oct 24, 12:18am 1729509483

Look at this extreme example as a solution to unaffordable housing in Queenstown

https://crux.org.nz/crux-news/rental-ad-seeks-195-to-share-bed-in-queen…

by GoWokeGobroke | 22nd Oct 24, 10:37am 1729546645

@ CN - So your suggestion to keep essential workers in the countries most desirable city where over 40% of the population lives is to subsidize their housing? Why? Because otherwise they'll move elsewhere? Good, let them move else where. I think that's more crying wolf than anything. 40% of the country live in Auckland. Highly unlikely that mass employees will leave in droves if their housing costs aren't subsidized.

by CN - new | 22nd Oct 24, 11:03am 1729548224

Thank you for your perspective.

"So your suggestion to keep essential workers in the countries most desirable city where over 40% of the population lives is to subsidize their housing?"

Not at all.

by GoWokeGobroke | 22nd Oct 24, 11:41am 1729550492

@ CN - Whats your solution then?

It would be a good thing if more business owners and employees exited Auckland and filtered their skills throughout the remaining of NZ. With more services then offered in more places accross the country it would provide more desirable locations, more jobs in more cities.

Actually it would be a good idea to incentivize other locations accross NZ to live and work. Good idea.

by Zwifter | 22nd Oct 24, 11:22am 1729549331

Spent four days in Auckland last week, that was more than enough. The moment I got over Bombay onto the southern motorway the stupid driving started. I honestly think you have a serious drug and mental problem up there.

by GoWokeGobroke | 21st Oct 24, 10:06pm 1729501588

@ CN - Why ever would owner occupiers get the same benefits as investors? They don't operate a business. They don't rent out their spare rooms in their house to those 28,000 families waiting on the government emergancy social housing wait list. Your argument is flawed with entitlement and makes as much sense as attempting to advocate for employees having as much rights to a business as the ceo themselves. The playing feild between owner occupied and investor is levelles already. Owner occupied do not use their homes as a business, renting to others who can't buy themselves a home. Therefore they are not entitled to the same benefits as those that do. Just the same as employees have no more rights to the large ceo wage simply just because they happen to work at the same company. When more owner occupiers rent their spare rooms to tenants in need, you may have a justifiable argument. Currently you do not. You have a "life isn't fair, they get more than me" approach. A typical tenant mentality stemming from entitlement and envy. The property market does not operate effectively using such emotive tools.

Basic business & economics lesson for you (you can have this one for free) - You don't get cheaper rents by making operational costs more expensive. They really should teach this in schools, rather than the jibberish woke gender dysphoria. Would be far more useful and far less confusing to understand.

However, I do agree with you though on one thing - That the way forward is certainly to incentivize more people, not just investors, to build rather than buy.

However, this is not achieved by attempting to punish investors for buying existing, then wrapping it up as an "incentive to build instead". We achieve this by making yields more attractive in new builds. We can achieve this by one of two ways; lower the cost to build, lower the cost to operate. Currently building is far too expensive, so building costs would either have to significantly reduce, or be heavily subsidized by government in order to achieve this.

You can't expect investors to "increase the number of residential dwellings for households" for little to no incentive at all. Labours socialists crowd would have one believe that the incentive would be to be "well liked" if one did all this out of "kindess" and charitable nature. These hippies are out of touch with reality. Ain't no one building or buying houses to house others out of charity. The predicament you find yourself in is on one hand you want more houses built, but on the other you want very little to no incentive at all for those who habe the houses built. You cannot have it one way andnnot the other.

What's more important? Having more houses built & accepting that it will not be done out of charity, so there has to be some sort of profit in it for an investor? Or your pride of financially punishing those that have more for the sake of those that have less, and leaving the house building and supply issues to government instead? We all know how Labour went. Just another casual 670 years for them to add the rest of their 100,000 ghost homes. Sure tenants can wait that long.

If getting more tenants into homes is the goal, you will need to suck up your pride & change your tact from the property investor witch hunt. Punishing one to help another has.never been an effective strategy.

by CN - new | 21st Oct 24, 10:15pm 1729502154

Thank you for your perspective.

The choice of language is informative.

by CN - new | 21st Oct 24, 10:38pm 1729503496

Perhaps your financial self interest is threatened by those policies?

by GoWokeGobroke | 22nd Oct 24, 11:03am 1729548184

@ CN - Sounds much more like your self entitlement is threatened by the reversal of such policies by current government.

It's not your bosses job to pay you enough to succeed so that you can eventually leave the job. It's your bosses job to pay you for the work that you do. It's your job to turn that paycheque to make it work for you.

It's not your landlords job to subsidize your housing costs just so that you can have an easier time towards home ownership. It's your job to strive towards home ownership by improving your own financial position.

It's not the governments job to financially assist or house you either. That's your job.

The reoccurring theme CN is that you seem to expect that every other entity that's doing better than ones self should have to give up a portion of their success so that you may have an easier time. This stems not from "equality" but nothing other than pure entitlement and envy. It is your job to look after your finances. You fail to do so, you will pay a high fee for life to get others around you to do what you should be doing yourself.

Get busy building your own empire, or get busy helping to build someone else's. Labours tyrannical dictatorship style policies will not help you.

by CN - new | 22nd Oct 24, 11:06am 1729548406

Thank you for sharing your perspective.

There is some very strong ideology here.

by GoWokeGobroke | 22nd Oct 24, 12:59pm 1729555179

@ CN - "There is some very strong ideology here".

Absolutely agree on both sides.

One side advocates for personal growth, acknowledging that their financial position is theirs to control to get what they want out of life.

The other side advocates for personal entitlement, expecting that it is the job of more financially fluent individuals to carry them through life because otherwise it's just too hard and it's just not fair.

One side advocates for equality of opportunity, where they recognize that not everyone can recognize opportunities infront of them, and thay many squander the opportunities. So it is learning and growing to understand and recognize the opportunities to better ones life.

The other side advocates for equality of outcome, by where they expect that anything earned or achieved by one, must automatically be applied to everyone, regardless if they strived for it or whether they simply just demanding and expected it.

I know which side of the fence I'd rather be on. It's pretty clear by your comments which side of the fence your from.

by CN - new | 21st Oct 24, 11:40pm 1729507252

Singapore is considered a free and open capitalist economy.

Their government chooses to prioritise owner occupier buyers over non owner occupier buyers in the private residential dwelling market by way of their tax policies, incentives and housing policies.

"Imagine a country with 90 percent homeownership. Imagine what it would mean to have a society with that rate of homeownership – with that high a level of security and wealth accumulation.

That’s exactly what Lee Kuan Yew, Singapore’s founding Prime Minister did. Although educated in economics and law at University, Lee Kuan Yew noticed as a child the differences between neighborhoods dominated by homeownership versus those that were mostly rented. Cleanliness, stability and low crime rates were among the benefits of an owned neighborhood.

In the end, Singapore is a city-state and when viewed as a city, there are some stark contrasts to its American counterparts. Sixty-three percent of Angelenos are renters as are sixty-nine percent of New Yorkers. Fifty-nine percent of Dallasites, fifty-five percent of Seattleites and fifty percent of Chicagoans also rent. Our urban corridors are vast lands of have-nots.

Or perhaps another way to look at it is that simply by owning a home in urban America – even if it doesn’t necessarily feel like it – you have joined an elite class."

https://3quarksdaily.com/3quarksdaily/2024/08/lessons-from-singapore-th…

by GoWokeGobroke | 21st Oct 24, 9:09pm 1729498162

@ ex agent - A good investor looks for both capital & cashflow. The chicken or egg question is what comes first?

by GoWokeGobroke | 21st Oct 24, 8:49pm 1729496985

@ Thats all folks - The election was already pre decided, Labour had all but sold its fate, with far too many broken promises, failures and angered the majority. National didn't need to do a thing.

Politicians very rarely get voted in, they almost always get voted out. The last election proved this again, where over 75% of voters chose not to vote for Labour. That doesn't mean they voted for National, but it does mean that a majority didnt want Labour. This shows clearly it wasn't a National win, it was a landslide failure for Labour. National was handed the election on a silver platter.

What this shows us is the majority of the country now knows that neither major party has what it takes to effectively govern, as both parties have done irreversible damage over the decades. A majority of people are now pretty well over voting for the lesser of two perceived evils each 3 years. It's counterproductive. The best outcome of continuing this trend is that we remain stagnant.

by Yvil | 21st Oct 24, 12:20pm 1729466446

Excellent !

by Ocelot | 21st Oct 24, 3:07pm 1729476467

If you're cheering for increasing debt, you know you've got something twisted.

by Yvil | 21st Oct 24, 12:27pm 1729466834

The latest survey was completed in September 2024 and covered credit conditions observed between April 1, 2024 and September 30, 2024

So, the survey was done before the latest 0.50% drop in the OCR>

by Averageman | 21st Oct 24, 12:34pm 1729467273

Just reduce the Dti level for investors and make them invest tax paid capital.

by ChrisOfNoFame | 21st Oct 24, 12:49pm 1729468148

In reading through the summary of the results (lots more commentary & graphs), the overall tone suggests things are still not all that great. (The references to working capital demands don't establish whether its businesses 'borrowing to hang on' or whether it is 'businesses borrowing to expand'. Probably a mix of both, but the mix is critically important.)

On mortgage lending, what's also interesting is that when pre-covid periods are compared to the 'next six months' (see page 10) the enthusiasm for mortgages outstrips pre-covid times by a wide margin. Another mini-boom? Maybe not. Anecdotal evidence from some friends involved in mortgage lending suggests quite a bit of 'demand' is coming from wannabe 'investors' that haven't done their sums but believe interest rate falls alone will be enough to return the market to peak in short order. We'll see. (I'm sitting on my hands and not buying until net yields grow to make it worth the effort & risk.)

Edit: Sorry. Forgot to mention that pages 12 and 13 give some hints as to where 'working capital' is being deployed. And one notes that 'capital expenditure' (business's investing) is either either non-existent or weak - but hey - that's a big step up from the past few years (but still doesn't signify 'good times ahead'.)

by CN - new | 22nd Oct 24, 10:02am 1729544564

Anecdotal evidence from some friends involved in mortgage lending suggests quite a bit of 'demand' is coming from wannabe 'investors' that haven't done their sums but believe interest rate falls alone will be enough to return the market to peak in short order.

Some non owner occupier buyers buying negative cashflow properties, motivated by tax free capital gains. The key underlying assumption here is 3% p.a capital growth.

https://youtu.be/xQ_ihS0FKvc?t=794

by GoWokeGobroke | 22nd Oct 24, 11:28am 1729549734

@ CN - Your not very clued up on property are you CN.

There is already a capital gains tax in NZ called the Brightline Tax. It's been around since 2015. That's nearly a decade it's been around for. Do try keep up

"The bright-line test is basically an objective capital gains tax for residential land bought and sold within a defined timeframe. The bright-line rules have evolved from seeking to prevent property speculators from working within grey and subjective tax rules, to more complication. This includes extending time frames, new rules based on date of acquisition, and rules designed to encourage certain behaviour (such as increasing the land supply)."

https://www.bdo.nz/en-nz/services/tax/the-bright-line-test?gad_source=1…

"The Bright-Line Property Rule (also known as the "bright-line test") is a law that determines if tax needs to be paid on profits made when a property is sold. It does not apply to properties acquired before 1 October 2015.

Like a capital gains tax, the bright-line rule calculates the difference between what you bought and sold a property for. It then applies an income tax charge on qualifying homes".

https://www.moneyhub.co.nz/bright-line-test.html

There's plenty of articles about NZs Brightline Tax, I'm surprised you wernt aware that this either existed for nearly a decade or that you wernt aware that it is infact a tax.

by CN - new | 22nd Oct 24, 11:47am 1729550855

@ CN - Your not very clued up on property are you CN.

There is already a capital gains tax in NZ called the Brightline Tax. It's been around since 2015. That's nearly a decade it's been around for. Do try keep up

There's plenty of articles about NZs Brightline Tax, I'm surprised you wernt aware that this either existed for nearly a decade or that you wernt aware that it is infact a tax.

Please ask a tax professional / tax expert / tax lawyer / tax accountant if they would label the brightline tax as a capital gains tax. There is zero tax to pay after 2 years of ownership, assuming the correct intention at time of purchase.

That label is used by the media to simplify the understanding of the bright line tax for the layman and non tax expert.

Attempting to discredit a person by way of personal attacks is very telling of the person making those statements. Stick to the issues being discussed and not attempted personal attacks on the individual.

by GoWokeGobroke | 22nd Oct 24, 12:37pm 1729553861

@ CN -If you find an attack on your limited knowledge of tax and real estate personal, perhaps you should instead stick with subjects you are much more familiar with.

It is justified to discredit your claims, therefore discrediting yourself when you make such blatant claims based on misinformation from your biased point of view, rather than the actual facts.

I have already provided you a link and source to BDOs explanation on what the Brightline Tax is. BDO is one of the 5th largest Accounting & tax firms in NZ. I would consider their definition of The Brightline Tax, which states very clearly that the Brightline Tax is already a Capital Gains Tax, over yours, who doesn't even believe that it exists.

The fact that Brightline Tax lasts for 2 years and not indefinite is also irrelevant. Taxing further all these investors with hoardes of property is highly unlikely to incentivize these investors to sell their properties. Further dampening the supply, rising prices yet again. Exactly what happened under the Ardern administration- property prices rose over 94% under their reign.

Your claim that taxing those who have more for the sake of those who have less is a Labour lead socialist fantasy. It is based on nothing credible but scorn, envy, laziness and entitlement. All the evidence over the last 6 years heavily supports this. It advocates that someone who owns more than one of a commodity must automatically be punished with more costs and taxes until they have as little as their peers do. The socialists way is to disincentivize personal growth, and instead breeds personal entitlement. Exactly why we now have people like yourself who advocate that it is the job of other people to prop up those who can't be bothered to do what's required to prop themselves up. This is the entitlement, that you believe businesses should operate out of charity and kindness mantras, rather than profit to enrich their own lives and the lives of their families.

Labour has decieved you deeply. Property investors do not operate a charity. We also already know that capital gains tax is tacked onto the end of the prices so that ultimately it is still the tenant/would be first home buyer that ends up paying this. This happened during the Ardern years & created the largest property price increase by the fastest growing rate in this countries history. We voted that out last election CN. More people said no to rapidly rising rents & property prices.

by IT GUY | 21st Oct 24, 12:48pm 1729468103

When you are out cold on the boxing ring floor, any movement is a sign that things are positive

by TronMVP | 21st Oct 24, 11:32pm 1729506774

Whose out cold on the floor? Can you name anyone or give any numbers? No, didn't think so. Write something if it is meaningful, not just to fill your obsession with commenting every day.

by Baywatch | 22nd Oct 24, 12:06am 1729508775

He is still wondering why the Haka is scary?

by delboy | 21st Oct 24, 1:02pm 1729468924

With interest rates declining some of that $250 billion in term deposits will find its way into property investment.

by JimboJones | 21st Oct 24, 1:12pm 1729469524

and of course with interest rates decreasing the rent can start to cover the mortgage again. so two groups of investors piling in.

by rastus1 | 21st Oct 24, 2:16pm 1729473382

Piling in? Next few months will destroy that narrative.

by Zachary Smith | 21st Oct 24, 4:34pm 1729481646

What's with the certainty of such statements? I see a lot of this on this website. It seems quite likely (note: not certain) that there will be more investor activity over the next few months.

by Toye | 21st Oct 24, 1:10pm 1729469442

Oh yay a survey.

"Look at what people do not what they say"

Another property on the market Mr Luxon?

by GoWokeGobroke | 21st Oct 24, 9:05pm 1729497909

@ Toye - Do only National politicians own homes? Do only National politicians wish to profit when finally selling?

We wouldnt want the country run how tenants run their finances.

by Zachary Smith | 21st Oct 24, 1:35pm 1729470954

The reality is that most landlords would be happy with 4-5% house price inflation.

If it had always been like this the perceived societal problems around housing unaffordability we are currently experiencing wouldn't be such an issue.

Some landlords will be sniffing around for good buys in the current market. I suspect the next six to twelve months should be pretty flat so there is no great urgency.

I now have term deposits that have higher interest rates than my mortgages.

by Yvil | 21st Oct 24, 3:20pm 1729477235

A good investor doesn't buy an average property. A good investor finds value, and I would suggest that there are quite a few vendors who will accept a lower price to get a sale done. Find these deals.

by Zachary Smith | 21st Oct 24, 4:32pm 1729481564

Yes, that's what I pretty much said. There's time enough to go hunting.

by Mypointis | 21st Oct 24, 4:46pm 1729482385

Worst part is I am actively looking and property after property I inquire about is under contract. I feel I have missed the bottom for sure.

by Zachary Smith | 21st Oct 24, 4:58pm 1729483137

I'm not looking myself, so, now I think about it, my comments are probably completely worthless. I remember what it was like looking for a property in the past and it is always easier said than done, always have to make some compromises, and inevitably have to pay more than anticipated. I never enjoyed it.

by Colin Cameron | 21st Oct 24, 6:16pm 1729487806

Put in a back up deal as still a certain amount of property deals are falling over. How I got my last one.

by NZGecko | 21st Oct 24, 8:26pm 1729495606

Bollocks!!

The filthy bottom is to be found in 2026 to 2028.

Gumbies buying today are the useful idiots of the ole Luxo selling PM.

He is lubing the buyers up with slippery, soapy Lux flakes for a gòod old financial roggering in the land of Negative Equityviĺle

Don't be a Useful Idiot......only pay the old 2015 to 2018 valuation prices.

by GoWokeGobroke | 21st Oct 24, 9:30pm 1729499441

@ NZGecko - You've clearly drunk the Labour coolaide if you believe that Luxon & his personal finances is the main driver or influence over house prices. Bet you also hypocriticaly believe that Labours string of unintended consequences had absolutely nothing at all to do with house prices.

Do labour politicians not own their own homes? Do what little of Labour politicians that actually own always sell their homes at a loss to help the next generation out as they preach on about?

Property values accross the country are down a staggering 20% on average. That is the largest decline in prices since the 1980s, 40 years. 08s GFC saw average drops of just 6% accross the country, and recovered in just 18 months to rise even further than they fell. The massive "pants drop" has already finished. What drops we are having now are now small at best, showing we have met the bottom of the market.

Sky is falling chicken little property skeptics cannot recognize the opportunity in front of them with drops of such magnitude. For them it's all about timing the market & waiting for the opportune moment to buy. They wait for the "bottom", screaming for decades of "the great bubble burst is coming" & not to buy until it finally happens. While they wait for the bottom, people buy up around them & secure their housing needs.

How do we know we are "at the bottom"? When prices start rising again. The chicken little property skeptics then bang on "don't buy now, prices are rising, you'll get ripped off". For tjem, its never a good time to buy, thays why they spend most of their time waiting, missing out, whilst claiming they are the smart ones for not "over paying" Their strategy is waiting, which is not the same as investing. How many opportunities have you personally missed out on from just waiting for the opportune moment to buy? You don't predict the market with your naturally biased "it's gotta drop all the way to the bottom", what ever that is. It's about time in the market, not timing the market.

You don't need to be an economist to realize that prices aren't going much lower than they are currently. There's over 40 years of property data against your "waiting forever for the great bubble burst" method. The "bubble burst" You've been looking for for decades has already been.

by NZGecko | 21st Oct 24, 11:24pm 1729506274

Youve just discredited yourself Ashley Churchless...... with the total BS REA selling mantra of "It's about time in the market, not timing the market"

Its REA rubbish 101.

This has led many leemings right over the cliff, to a sticky financial end, who purchased over the last 5 years!

We are but midway, in the once in a lifetime NZ property crash! We are now down over 40% in REAL terms in the larger cities and the rural is catching up with these epic losses.

The last 40 years have driven housing prices high and higher, far above wage inflation, out onto a very skinny branch ....... ONLY BY THE COST OF MONEY GOING CHEAPER AND CHEAPER. Come 2021, that jig is up and done, finished. Money will cost more and inflation will reflare time and again. Deglobalisation, Wars, DTIs and Tariffs will see to it. Observe the world without the rear-vision, rose tints bud.

If your still dancing the "housing prices to the moon" or more than wage inflation dance, you will be dancing alone.

Luxy is selling his properties, as he know the market is tanking and will tank all the way to the eventual implementation of a general property CGT implementation. It not a matter of if, it's a matter of when dear Watson!

I have all the housing I will ever need, to live in happily.

Labour are airheads and I don't trust then any more than the current lot, yet the CGT tablet is already chiseled, it will be. Like it or lump it.

by Zwifter | 21st Oct 24, 5:07pm 1729483652

So predictable, just wait until the RBNZ drops another 75bps in November.

by The Man3 | 21st Oct 24, 7:07pm 1729490821

Why shouldnt investors that are propping up tenants housing costs actually receive capital gain?

If there was no capital gain then why would anyone be a landlord ?

They wouldnt and therefore there would be a long line waiting for government housing!

The reality is that Investors do not force up house prices at all unless they are very poor investors!

I have been in the property industry for a long time and I will confirm that it is the owner/occupiers that cause the prices to rise and not investors!

Landlords deserve to receive capital gain for providing housing and everything they do in maintaining and improving the housing stock.

by CN - new | 21st Oct 24, 7:17pm 1729491428

If there was no capital gain then why would anyone be a landlord ?

Non owner occupier buyers can get their untaxed capital gains in the new build market. Add to the underlying supply of residential dwellings in NZ.

There would be more buyers of property built by the likes of Williams Corp.

by NZGecko | 21st Oct 24, 8:32pm 1729495921

The walking Zombies...... Wolfies and Williamsons.......they need buyers NOW!!!

The are thirsty.... and in a very dry desert!

by GoWokeGobroke | 21st Oct 24, 9:42pm 1729500149

@ CN - Building has always been more expensive than buying existing. The numbers just don't stack up building new and renting out. One who builds is unlikely to be able to charge enough rent to even become cashflow neutral, let alone positive. Rents would have to significantly rise to accomplish this.

Exactly why Labours incentive failed. You don't incentivize investors to build the houses that the Labour government failed to build by disinventivizing buying existing homes that yield better. You get investors to build new homes by increasing the yields on new builds. Anotherwords, government would have to find a way to make it cheaper for investors to either build, or cheaper to operate. Whether this be covering the GST portion of the build or some other method. If yields are better on existing, then investors will buy existing. It's not hard to figure out. You dont get a donkey through the corn fields by whipping it.

by CN - new | 21st Oct 24, 9:54pm 1729500867

"If yields are better on existing, then investors will buy existing"

The country needs more residential dwellings for its residents.

Government policy can make yields on new builds more attractive than existing dwellings by adding Singapore's stamp duty rates on existing dwellings.

"You don't incentivize investors to build the houses that the Labour government failed to build by disinventivizing buying existing homes that yield better. "

Those policies reduced the number of non owner occupiers buying in the existing dwelling market as the rental yields after tax became unattractive. Many non owner occupier buyers were buying new builds. With the change in policy, non owner occupiers are now back in the existing residential dwelling market.

by CN - new | 22nd Oct 24, 9:38am 1729543117

Residential real estate at lower price points - non owner occupier buyers are outbidding owner occupier buyers

Pointon said there had been an uptick in demand for houses in the sub-$800,000 price bracket in Hamilton, with first-home buyers now facing competition from investors, who until now have largely been absent from the market.

One of his listings, a three-bedroom home on Howden Road, in Fairfield, had received seven offers within six days of hitting the market and sold to an investor who made an unconditional cash offer of $740,000.

https://www.oneroof.co.nz/news/latest-news/they-know-they-will-be-blowi…

by CN - new | 22nd Oct 24, 3:03am 1729519430

"Why shouldnt investors that are propping up tenants housing costs actually receive capital gain?"

The reason the non owner occupiers are in negative cashflow is mostly entirely due to their financing choices.

Net rental for most freehold residential real estate purchased on 100% equity finance (i.e 0% LVR) is positive.

by Let me be Frank | 21st Oct 24, 7:16pm 1729491362

What supports mortgage payments?

by GoWokeGobroke | 21st Oct 24, 10:31pm 1729503086

Having a stable income, and not expecting that it is someone else's job to do it for you. That's a good start.

by lockdowndays | 21st Oct 24, 10:25pm 1729502756

Would love to hear an expert's opinion/analysis here on what effects DTI may bring about on dampening future price increases? My hunch is it will be more dramatic than people expect.

by CN - new | 22nd Oct 24, 12:59am 1729511940

Could see syndicates of buyers combining their incomes to increase their borrowing power and hence purchasing power.

Already seeing multi-generational buying by owner occupier buyers.

Seeing more owner occupier buyers rent out rooms to boarders and flatmates to increase their income and hence borrowing power and purchasing power. Even heard reports of income from boarders who are non- existent included in loan applications - a practice promoted from some mortgage brokers.

Already seeing syndicates of non owner occupier buyers buying existing residential dwellings.

by ChrisOfNoFame | 22nd Oct 24, 2:09pm 1729559369

As you asked:

Enhancing the efficiency of macroprudential policy: activating DTIs and loosening LVRs. Regulatory impact statement

That's a reasonable starting point. And with plenty of references if you're so inclined (I was).

It's worth noting - mainly because most commentators here never do - that there are two sets of LVRs and DTIs.

One set for Owner Occupiers, and another set for residential property 'investors'.

(And just to make life even more entertaining, there are different tax rules for buying new builds if you're an 'investor'.)

by youngdumbandfullofit | 22nd Oct 24, 8:50am 1729540222

Would be nice to goldilocks forever. I guess whatever minimal growth is required to maintain incentive to build enough for any population growth but outside of that flat/inflation hedge would be the best outcome for the most people.

by John Mendel | 22nd Oct 24, 9:46am 1729543566

End of 2025 house prices 20% UP!

by NZGecko | 22nd Oct 24, 6:41pm 1729575674

Love your Jokes JM!