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RBNZ announces LVR restrictions for Auckland rental property investors; they must have at least 30% deposit; LVR relaxed outside of Auckland

RBNZ announces LVR restrictions for Auckland rental property investors; they must have at least 30% deposit; LVR relaxed outside of Auckland

By Bernard Hickey

The Reserve Bank of New Zealand has announced Auckland rental property investors must have a deposit of at least 30% in a sweeping new escalation of its measures to try to slow house price inflation in Auckland.

However, the bank has eased the current Loan to Value Ratio (LVR) restrictions for property buyers outside Auckland and has exempted new builds from the new restrictions on Auckland rental property buyers.

Reserve Bank Governor Graeme Wheeler said in the news conference after the release of the bank's half-yearly Financial Stability Report that the bank's modelling suggested the measure could reduce Auckland house price inflation by 2-4% per annum and reduce Auckland sales volumes by 8-10%. He also said it would be useful for the Government to collect information on non-resident buying.

“Auckland’s median house price is 60 percent above its 2008 level, and house prices in Auckland have been rising rapidly since late last year," Wheeler said.

"This reflects ongoing supply constraints and increased demand, driven by record net immigration, low interest rates and increasing investor activity. Prices in the Auckland region have become very stretched, increasing the risk of financial instability from a sharp correction in prices," he said.

In response, the bank said it proposed the following changes to its LVR policy from October 1:

  • It would require residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30%.
  • It would increase the existing speed limit for high LVR borrowing outside of Auckland from 10 to 15%, "to reflect the more subdued housing market conditions outside of Auckland."
  • It would retain the existing 10% speed limit for loans to owner-occupiers in Auckland at LVRs of greater than 80%.

“We are proposing these adjustments to the LVR policy to more directly target investor activity in the Auckland region, where house prices relative to incomes and rent are far more elevated than elsewhere in New Zealand," Wheeler said.

“The objective of this policy is to promote financial stability by reducing the rate of increase in Auckland house prices, and to improve the resilience of the banking system to a potential downturn in the Auckland housing market.”

Wheeler said the new measures aimed to moderate housing demand, but policies to increase supply remained the key to addressing Auckland's housing imbalances.

New builds exempted

Deputy Governor Grant Spencer said the Bank would issue a consultation paper in late May providing further details and seeking feedback on the new LVR proposals.

“Prior to the proposed introduction of the policy in October, we expect banks to observe the spirit of the restrictions and not seek to expand high-LVR investor lending in Auckland," he said.

Wheeler later said the Reserve Bank expected the banks to observe the spirit of the new restrictions in the interim period before October 1 and he would be meeting the chairs of the banks and their executives to discuss the new restrictions.

“Given the importance of encouraging residential construction activity in Auckland, and consistent with the existing LVR policy, the proposed LVR restrictions will not apply to loans to construct new houses or apartments."

Spencer said the Reserve Bank was establishing a new asset class for bank loans to residential property investors. Banks would be expected to hold more capital against this asset class to reflect the higher risks inherent in such lending, he said.

“Following a lengthy consultation process, we have decided that a residential property investor loan will be defined as any retail mortgage secured on a residential property that is not owner-occupied.”

Holiday homes not covered, unless rented out

Spencer later clarified that the policy did not apply to holiday homes, although he said consultation would look at situations where holiday homes were rented out for periods.

A summary of submissions received in response to the consultation would be released later this month, and details would be provided on the implementation of the new asset class, including on the proposed capital treatment of residential investor loans.

The new asset class would take effect from 1 October 2015 for new lending, with a further phase-in period of nine months for the reclassification of existing loans.

“Given the broader risks facing the financial system, it is crucial that banks maintain their capital and liquidity buffers and apply prudent lending standards. Later this year the Reserve Bank will be reviewing bank capital requirements in light of global and domestic developments affecting the safety of the banking system,” Spencer said.

(Updated with more details, comments from news conference)

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Good on Graham Wheeler, someone had to man up

It's crunch time, the gig is up, the music has stopped and Wheeler has taken away the punch bowl.

Witness NZ at the peak of its prosperity, she's all down hill from here, and its a slippery slope all the way. You've got until Christmas to get everything thing in order, after that things are going to get real nasty.

I have to assume that Wheeler knows what he has done, and I think it may have been the least bad option, crash early and hope things wont get too out of control. He certainly saved John Key's carrier, since it will now be obvious who is responsible. Not that this can end any other way, but at least now we have a sacrificial lamb.

Good luck, and if I don't see ya, good afternoon, good evening, and good night!

Are you getting ready to be wrong again?

You don't get it, do you? Investors/speculators have been the only thing underpinning the Auckland housing mania. The RBNZ just hiked margins by 50%, effectively locking them out of the market. How many PI's have greater than 30% equity? Without them the market can only go one way.

The NZ economy has had three foundations post GFC, Chch rebuild, which is past its peak, Auckland housing which has just been gut punched, and massive investment in the dairy sector which is taking a beating, and is about to be hospitalised.

At the end of the day. it's the flow that matters, and the tap has run dry.

you forgot the Tigers and Flies and Foxes and Sky-hunters and fox-holes and bolt-holes

The OCR is relatively high. Lots of room to cut and stimulate the economy. So there is no musical chairs, taps or Gerald Celente like clown logic going on here.

Please present evidence in Japan, US and Europe where ZIRP has produced sustained examples of your expectations other than asset bubbles.

Well, you just supplied the examples yourself. The U.S. Is bouncing back. Europe first had austerity and got their a** handed to them. Only recently have they started to abandon austerity a little. Japan is a different story because unfortunately Japan has shown that it barely capable of doing anything properly.

2008 the OCR was 8.25% today it's 3.5% and yet you think it's relatively high and still a lot room to cut? Living in your own private reality are you?

Relative to other advanced economies.

other advanced economies are already pricing in OCR risesfor later this year early next year , we are heading in the other direction as per usual

There is not a single advanced economy that will raise their rate this year. Not one. Quote me on that.

Hard to quote an alias - step out from behind the veil of anonymity so all can consider holding you to your promise.

'someone had to man up'

Well it was never going to be John Key was it.

Finally some good news for the regions (non Auckland)


Should have made it 50%.



hmmm..... you might have to reconsider that. I think it only applies to residential property investors. Not first home buyers.

well spotted, comment abbreviated, thanks

Shocking and disappointing.


Exciting and well done Mr Wheeler

Yep I agree, frazz, I agree.

It's Shocking because this draconian measure will reduce the rental stock. So it will be disappointing for renters like yourself.

Enough with the fear mongering. Let's look at the scenarios;

Investor sells to first home buyer: the renter becomes an owner
Investor sells to another investor: no change for renter
Investor sells to non-first home owner occupier: either of the above occurs at purchaser's existing home

Pure fantasy. Here is the likely scenario:
Less local investors to buy property (which they rent out to the poor to provide them shelter) and hence less competition for foreign investors (do they care about our poor?) Therefore more of New Zealand sold off to foreign interests.


Absolutely, but the RBNZ can't legislate - the Government can. And should.

Investor can't sell as nobody else has the equity/cash to buy. Investor hikes rents!

or investor sells for a small loss and learns a lesson, next time check your fiqures before investors

Can you expand Onwards..rental stock is currently abundant with flat and falling rents.

Really? Is that why renters are formimg long queues to try secure shelter? I often have bidding wars between renters to secure a property. Perhaps you meant that there is a supply of leaky rentals out in the a** end of Auckland available for the desperate.

But you are helping the poor as quoted, surely you would not want to rent out a leaky rental?

That he didn't make it 50%? Me too.

A lesson to all in Liberal Democracy vs Fascist Rule!!!

Expected and satisfactory.

In fact you should thank Mr Wheeler. He is trying to protect you from the risk that you don't see. What a decent bloke. Not only that, he's ensured that your yield increases. That is what you invested for, right?

What hacks me off is, in terms of "you" if it was a risk and impact ONLY to the property gambler, honestly I wouldnt give a flying fig what their LVR, income or debt etc is, it would be none of my business or concern. When "you" is the tax payer ie me and my children I can see the risks that we will have a banking collapse and I as the tax payer and my children will be expected to bear that, on many levels ( collapsed economy, less public services, higher tax) not the gambler even though I benefited not. Not only that but my children who are too young to vote will be forced to bailout the OAPs who are old enough to vote responsibly but have not for years if not decades. A word comes to mind, its amoral.

exactly. And what bugs me is that the only parties doing well from this process is the Bankers and the government officials paid to make motions.

Very true cowboy!

and what hacks me off is the over generalization which dominates many postings on this site. To add to that, I'd say that almost all property speculators that I know are in their 30s and 40s and not quite OAPs. To blame or bash OAPs for more general societal issues is not addressing the real issue which is the rampant distortion of the economy by greed and entitlement. Most OAPs that I know are not in that category - and I'll stick with that generalization.

Didn't Mr Wheeler concede low interest rates were partly to blame for the outcomes Steven laments. Most OAPs own one home other than those the banks buy with their savings funded at below risk adjusted interest rate levels. In his own words:

"Auckland’s median house price is 60 percent above its 2008 level, and house prices in Auckland have been rising rapidly since late last year," Wheeler said.

"This reflects ongoing supply constraints and increased demand, driven by record net immigration, low interest rates and increasing investor activity. Prices in the Auckland region have become very stretched, increasing the risk of financial instability from a sharp correction in prices," he said.

Yay - now I don't have to compete with those lousy first home buyers and amateur property investors in Auckland :D

Perhaps, but if your existing rental investments are encumbered then you may have to pay higher interest rates due to the proposed new 'investor class'. I hardly think that is cause to be excited.

Keep dreaming! Interest rates are coming down - expecting an OCR cut soon -
All's well in landlord land if you've got the equity :D

...perhaps you need to go and listen again to what the RBNZ actually said.

there is inflation already coming through, wages are static but fuel has risen 30% in the last three months and that feeds onto everything

Putting my self-interested cap on for a moment, I must thank Wheeler, Spencer and co for making it even more difficult for property investors to buy houses and supply people who want to rent with a house to live in.

I will of course now have less competition from other investors to lease my properties.

I can therefore expect to see demand for my properties increase, hence will be able to increase my rents.

Thank you to the Reserve Bank for helping my cash flows even more. I will be able to by more properties with my improving cash flows.

Great time to buy at the peak

No you wont, Overseas buyers will find it cheaper to snap up the bargains without pesky first home buyers and local speculators/investors. His tools only effect local market not overseas sourced funds. Can everybody say "Kentucky Fried Kiwi"

RBNZ has no control over non-domestic banks. But it should make the extent of overseas buying more obvious and increase the political pressure on the Govt.

Thats the media job, but most dont have much clue, Sean Plunket didnt finish school

No you won't. This doesn't miraculously mean there is less housing stock. And unless you are the only man that owns all the houses, then it will come down to competition from other landlords with enough equity.

Disingenuous, yet again.

Not at all Value Added.

I figure that if someone makes it more expensive to provide a service ( ie a house to live in), then the price the user (ie the person paying rent) will pay for that service will rise.

As a long-term property owner, I will benefit from the person paying the rent having to pay more. So Wheeler and co have done me a favour. Do I think Wheeler and co have been fair on tenants? Hell NO. They are the ones who will cop it in the pocket.

BTW... I am not being "disingenuous." Never have been. I am a long-term property investor. No secrets. My experience of the property market is that I have done better by holding property and not selling, than others who are trading or speculating in the market. I have tenants who live for years in properties I own. They seem to love it 'cause they stay there ... believe me!

It's disappointing that you think I am not sincere in my views. I am. Any review of my comments on will show absolute consistency on my part.

One thing that you don't seem to comment on is flat of falling rents? How are you going to pass on this increase when the market dictates the rent not the landlord?

I agree frazz.

If increasing costs of entry for landlords also increases the cost to the tenant then why have rents in Auckland dropped over the last few months while house prices paid have increased?

Are rents flat? Are they falling?

Well, over the precise, short period of time you might like to highlight, perhaps they are.

My experience: I own houses that once upon a time rented for $125 per week. They now rent for $380 per week. That once rented for $390 and now rent for $755 per week. I have lots of other examples. I acknowledge that perhaps, as the years have passed, rents were flat for a period of time. Perhaps they even fell for a period of time?

But I am a long-time investor. What is happening just now is only a short period in the time I have owned the properties and WILL own the properties.

You get hung up over what is the situation now. I think you have a developer/ trader's view of the markets. I have no need to comment on rents going up or down now or in the last little wee while. 'Cause over the long time I have owned property, rents rise (like capital values, by the way). Sure rents may not have risen in the last little while. But they rose before then, and they will rise in the future. And I will still be invested in the future.

My view: The yield (ie rents) from a property will increase as interest rates on bank accounts increases. As a long-time investor I can happily wait.

I'd like to know what your balance sheet looks like YL. However if it is as solid as you seem to imply, you are by a long shot in the minority. I'd put a decent fraction of PI's totally dependant upon rising values and rising rents. Even according to your view (rising interest rates) rents aren't going up, and with values falling, it's going to put the acid on PI's with a net equity of 20%, more so for those with negative cashflow.

Skudiv, the vast majority of residential properties don't have a mortgage secured on them. People have paid off the mortgages. I am not a "long shot in the minority."

Heavily indebted property owners are in the minority. Especially so with all the capital gain in Auckland over the last few years.

You seem fixated on the idea that every property owner bought 'last week with 110% borrowings' (for example)?

My situation: I have owned multiple properties since my early twenties, paying down the mortgages and keeping the properties as capital values and rents have increased. I now find myself with debt around 15% of total equity. Why would I be fearing the never-yet-arrived 'property collapse' some extremists on keeping babbling about? (in fact the banks are emailing and ringing me saying "do you want to borrow more money?" I jest not here ... one bank manager, unprompted, estimated my borrowings on the portfolio I have with him at 9% debt-to-equity ratio. He was encouraging me to borrow more by pointing out how much equity I have.)

How's that for being really inefficient with my equity? 'Cause that's what I am being.

So I will of course be buying (not selling to pay down remaining debt) and, as I originally said, if Wheeler and co want to make it harder for others to buy, then who am I to complain? And who am I to complain if interest rates rise, making it harder for others to buy, and, in my opinion, pushing up yields?

That's actually even more conservative then I assumed. With 8% of Aucklands housing stock changing hands in the last 12 months alone, I'm gonna stick my neck out and say you are still in the minority. I'm not assuming everyone bought last week, just assuming most PI's keep their net equity between 60-80%.

As you say, Wheeler is attacking demand, and with prices at record highs on all measures this can only send prices one way. If it pushes prices down, and pushes yields up I think that would be a good, healthy thing, at the same time I'll agree with Olly, there will be tears.

The aggressive property investors maintain 20% equity.

They buy and renovate to recycle the deposit so they can buy again and renovate etc etc.

A rising market full of these types leads to what we have been seeing in auck.

And i can guarantee with 30% now the new level of dep to recycle from renovating they will drop the Auckland market like a lead balloon. Their game no longer works in Auckland.

The big question is how much have these sorts actually been influencing the market? Time will tell.

It's laughable really......

Some seem to think Financial Stability is about driving prices lower they are hoping for a crash and house price deflation......Yet the RBNZ's actions are to ensure that there is no house price deflation.....they don't want house prices going sideways...they want them going up......

When you have Government subsidies and these RBNZ policies.....YOU HAVE A ROYAL FLUSH!!!

You think this will push prices up? How can prices go up when the RBNZ has killed demand?

Is it just local exposure the RBNZ is worried about?

At least monitor cash buyers and corresponding foreign exchange, since foreign investment isn't being addressed. They will not care if NZ buyers are being restricted from the market, the prices are already doing that.


Good on you Graham Wheeler. We all know deep down if the price increases in Auckland are allowed to keep rising as they are, an almighty pop must eventuate at some point. This would be bad for everyone.
The question for him is, how does he restrict Auckland prices without further penalizing the regions, or FHB's in Auckland.
This seems like a decent balance. Now we need some form of restriction placed on the cashed up foreign buyer. John it's your turn to step up.

Hear Hear...Did you say step up, but mean "Wake Up"

To little too late, is my opinion. Digging us into a hole, then bailing out by flogging off our assets to overseas interests is not my idea of "Good Management"

Just like best practice is never the same as best practise first. And getting it wrong.

Solid Energy. Always comes to mind. Going for broke was the Governments urge. So they could flog it off. Look where that got the West Coast etc.

And look what Fonterror has done by exporting our expertise. Dumb as the Kiwis Fruit industry who did the same, then allowed PSA in via Border Un-control to decimate the business..

IP is a bit rich, but not when you give it away. Then allow the customer to steal your land, your business and your lively hood and your house, your jobs, your Mana and the Public Purse. Changing Flags...I say America first...China last...if I was gonna hedge my bets.

But I do not want any of them. Not at any price.

You forgot the star of the show.
LIC ventured a _loan_ to a Chinese seed development company, and then GAVE them the LIC genetic database (50 years of genetic profiling of food ruminants....potentially one of THE single most valuable transferable items on the planet, and an advantage that is singularly impossible to catch up on).

Sorry Cowboy...I used to be affiliated with both Fonterror and LIC...from way back..How can I forget.....EASILY.

.So I know where you are coming from. And I know where they are going too.

I do not think they have a way back.?!

It was apparent even then...many moons ago. And they developed the wrong attitudes.

Some even hated the Farmers, they should have served...better.

As wasteful as a a Co-op can be, with 'other people's munny'

Lived high on the hog, breeding wasteful full Management, bleeding their customers dry. Profligate and wanting to expand their customers horizons, but killing the fatted calf and didn't understand what the Companies actually stood for. IE. SERVING THEIR CLIENTEL. not the overseas interests and them selves...first..

I could go on. But I am glad my experience was not quite like yours.

Get over it, get a life, control your own overheads....and may you live long and prosper.

Do not live by their example. ...or the ones I did display above.


As mentioned before - New Zealander Of the year = Graham Wheeler, for doing something at least while rome burns.

I don't think running a promotional campaign and supplying the fuel counts as "doing something". If so I wish he'd do his something in your backyard, not mine.

This does nothing to stop foreign investors who are sourcing cheap offshore money to buy property. It just slows nz investors.

Those overseas funded buyers do not threaten the NZ banks financial stability. If there is a crash, those people who have borrowed money overseas, well their bank loses out. Who cares!!! Locally there is just one more mortgagee sale. Kind of adds to the crash though.

Agree they don't threaten NZ financial stability, and in fact this is the best type of foreign investment: they buy at peak, then sell when it crashes. Net result: NZ wins.
This happened spectacularly with a small dairy company in South Canterbury a few years ago - a Russian company bought it out when no-one in NZ would/could put money into it, then they got into trouble and sold it at a massive loss to Fonterra shortly afterwards!

What does a 30% deposit mean in practice? For example, to what extent could banks let existing property owners draw down on the book value equity of a property and use that as a deposit?

I guess if this has a significant impact, it will become more apparent how many sales are being financed by non-domestic banks.

As long as the mortgage from which one is withdrawing equity remains within the 70:30 ratio - that I assume could still happen.

Even so, this is a dampener - as many rentals are already financed on low deposits and given rents are not rising at the same rate as house prices - equity is not reducing significantly for those highly leveraged rental investors.

It's a sensible move - and I suspect will have an immediate effect in lessening the competition where FHBs are concerned.

I have a theory that anything the RB/Govt tries to cool the auckland house market backfires and results in an acceleration. The LVR limits caused auckland house prices to accelerate so how will this differ?

You have confused correlation with causation. I can explain how this differs though, generally PI's have always needed a 20% deposit, the 5% deposit generally only went to owner occupiers. So the increase in LVR's had a negligible impact on PI's, because they were already at 20%. A 50% margin hike is pretty much guaranteed to push prices down.

Chinese attack the NZ system/Auckland house market like an army. They have very effective communication networks and any loophole/weakness in the govt safe guards and systems are exploited immediately.

This will certainly not affect Chinese buyers.


Those parasites should be hit with a 30% tax.

I would not call them parasites, they are just exploiting the rules as they are . But, they are very good at it due to their communication network.

That's exactly what they are.

Expect a big rush before October?

Doubt it. The writing is on the wall. If anything, it's the FHBs who will wait it out between now and October, as they'll be expecting price drops once there is less competition.

For the exits?

well done wheeler as an investor in the big banks now feel a little bit safer with my holdings, was seriously thinking of selling in the last weeks with statements coming out from the local CEOs

Sensible and overdue response from the RBNZ.
The LVR limits that were introduced earlier had little real effect on the regional areas. The Banks already had a very cautious approach to lending in areas with flat house prices so no significant change there with the introduction of 80% LVR limits. The more targeted approach is a good one.

The LVR stuffed the regions which are still below 2007 levels. Just as the regions were beginning to recover the RB bought in the lvr limits and stuffed the regions again.

And, the chinese will continue to borrow from chinese banks at 0% and smash local buyers who now have to stump up a 30% deposit. I'm guessing the RB have a lot of chinese mates.

The retail banks required that level of LVR in the regions anyway. What it did do is give the banks an excuse to block regional lending for no real reason.

Decision made only at the banks interest to avoid a pop in the short term.
Forgetting about to other problems this causes long term, social injustices pricing kiwis out, delaying the inevitable correction.
The problem with housing supply at the moment is not regulatory, its practical construction - there aren't enough tradies to fuel my sites so they're sitting there half finished.
Better off to remove the restrictions and let the market correct before it it really does bubble and explode.
I can see the Government cleaning this up in the medium term. Perhaps wiping it up with that new flag

How would this affect existing PI's with less than 30%? Especially when moving to a different lender? Would the new lender look at the property as a new loan therefore needing more than 30% equity to accept the loan?

I think this is the most critical question of all. If all investor debt being rolled over needs 30% equity this will be an absolute game changer. An investor looking down the barrel is not going to wait until the debt needs to be rolled over - or at least they shouldn't be.

Might be an interesting winter selling season. Perhaps a lot of investors will lock in 5 year borrowing before October to buy themselves a few years?

That's what I'd do if faced with this prospect.

It will only apply to extra lending not rolled over debt. Hopefully it catches out the sean "15 million dollar man" woods types who ķeep ignorantly (of real economics past how to sell things) hyping auckland property. A lot south auck do ups that they're going to be stuck with. Should of been buying where yields make sense outside of auck where prices are supported by more than hot air

Having read the report I'm not sure about that. I think refinancing may also be captured. Floating mortgages?

Seems pretty clear "all new lending:,

It will only apply to extra lending not rolled over debt. Hopefully it catches out the sean "15 million dollar man" woods types who ķeep ignorantly (of real economics past how to sell things) hyping auckland property. A lot south auck do ups that they're going to be stuck with. Should of been buying where yields make sense outside of auck where prices are supported by more than hot air


.. oh briliant..export the problem to the regions. Can see the cash flooding over the Bombays from here.

Pathetic....get on and deal with foreign investors, the rest is ssmoke and mirrors.


John Key does not see any foreign investors.


John Key does not see anything period, he will go down as our next muldoon, we will lok back in ten years and say how where we fooled for so long

New lending rules targeting Auckland residential property investors will cool the market somewhat - but the city's "gravitational pull" will counter any impact, Prime Minister John Key says
john key speak for will make no difference to foreign buyers and I am going to do nothing to solve it

Funny you mention the regions; the only thing stopping the RB from dropping the OCR is Auckland house price inflation. If we see house price growth slow in Auckland we will almost certainly see the OCR and interest rates dropped; this will have a duel effect. First, it will give Auckland prices a soft landing. Second, it will fuel bubbles elsewhere in the country and this second point begs the question... where's next?

and what do we do with mum and dad investors? They are not a problem?
So the problem is not speculation, is speculation from overseas?

I rather have speculators from overseas borrowing overseas than risking our financial system in the way we are doing it (by allowing this situation).

If only the story about "cashed up foreigners" driving up prices were true..

Is it that difficult to see that property "investment" (gambling) is a social disease that affects the common NZers?


The only solution to foreign buyers is to vote Winston Peters.

I've never voted for the guy, and usually voted act or national.

But, I think we are losing our culture so it is time to get Winston to sort this out.!!!!!! Despite other things I don't like about him.


Not that many bothered to actually read the manifestos, but all the main opposition parties (Green, Labour, NZFirst) had stated policies to restrict foreign buyers at the last election.

All you really had to do was not vote for National. Seems like a lot of people are coming to regret it now.

No one in their right mind will vote anything other than National at the next election unless the left get their act together. No rational person can look at Labour, Greens, Mana and Winston and honestly say they will be an effective working team. National didn't win the last election, the left and Dotcom lost it.

Anything would be better than the sellouts we have now.

every party except national and ACT are saying bring in restrictions on foreign ownership, but then we know what happens to their ex MPs, brash, Richardson, Shipley, tremain.all on the boards of Chinese banks that have opened branches in NZ. not to forget all the other Chinese company boards containing ex Nat MPs.
Philip field got sent away for giving out work permits for free work on his houses, just saying hmmmm

"Loosing our culture"?

And what is exactly the NZ culture we are "loosing"? What is NZ but a young country that has borrowed cultures from so many different countries around the world?

Or do you mean the "Maori culture"? I'm afraid it's long lost..

There is not such a thing as NZ culture no matter how often they mention "what kiwis like and don't like" in commercial ads. It's just an attempt to create a national identity that doesn't exist ..yet
Sorry but many other countries like BBQs and playing in and around the water as well :-)

And that's not bad, I'm far from trying to criticize NZ multicultural civilization (I'm also an immigrant here like many of us or our close ancestors and proud to feel integrated in the NZ civilization)

So.. no. We (older and newer NZers) are not loosing our culture, we are still defining it.

..or is it mainly about Asians but we're trying here to add some "foreigner" camouflage? :)

..or is it that we can allow mum and dad investors making profit at the expenses of future generations as long as they hold a NZ passport despite not paying capital gain taxes that compensate the whole society?

PD: I agree there are other options than voting for NZ First to stop this speculation madness that will damage us all eventually.

Garbage. Of course New Zealand has a culture. It's a European culture based on freedom, democracy, education and human rights and tolerance. go to China and see if they have the same culture as what I just mentioned.

This will do nothing to discourage the foreign investors. The latest practice I've seen is agents (on behalf of foreign buyers) approaching property owners who don't even have their house on the market and convincing them to sell. They offer above top dollar just to secure the property without it hitting the open market.

Foreign investors is the job of the govt - if they had got off their backside and actually done something then the RBNZ may not have needed to do this.
RBNZ is financial stability, govt is all the rest.
Go and ask your local national mp what they are doing about this?

From what I can see FDI in the Auckland market is currently at biblical levels and foreign buyers don't blink an eye at throwing a extra 100k onto an offer to ensure they secure a property. In my opinion Auckland prices will be another 15% up this time next year

yes, the party isn't over yet, it has some way to go

$100k on top is pocket-fluff

Yep, John Key's turn now.

And the effect on local investors... If you've just made 15% yoy gains on your Auckland portfolio that's more than enough equity to cover the higher LVR requirements and buy more properties. But now the market is more stable and less risky.

So you've purchased an investment property with 10% equity, let's call it $50k ($500k property). You've borrowed with interest only and made a 30% gain, so you now have almost exactly 30% equity ($450k debt, $650k property value) - so you are JUST able to scrape in and roll over the existing debt.

Where does the 30% equity for the next property come from? Keeping in mind 30% of the now $650k property is nearly $200k.

If you've purchased during this 'boom' with a small deposit I don't think your argument holds. Taking the above example, a lot of investors who purchased in the last 24 months or so might not even have the 30% equity to roll over the debt! Uh oh......

Agree that some will be effected, those very close to the wire, most of the bigger players already hold greater than 70% LVR.

The last LVR introduction, 80% LVR to the whole market, gave the upper hand to investors and foreign buyers. I wonder what the unintended consequences of this latest decision will be... What group will be dealt the upper hand by this...

Those who have sold and are waiting.

Yip, I'm sure there are heaps of people out there who are stoked they sat on the property side lines.

... still no one is addressing the actual problem .... the horrendous escalation in land prices over the past decade or so ...

Everyone from the stoopid local media , to the politicians , to local government , is side-tracked with non-issues such as foreign investors , house prices , CGT ....

... it's the cost of sections , guys ... focus on that , solve the problem .... introduce a land tax for one , allow intensification of land use for the other .... problem solved ... bugger it , no one's listening ... hmmmmmm , where's me Gummies ..... yummmmmm..... gooey-goodness .... ahhhhhhhhhh...

What's the fuss about, GBH?

There's a scared kid running around the house with a popgun while his drunken parents snore on in the bedroom.

A bit pathetic but nothing else to see.

(Actually I like that. The RBNZ are Home Alone).

Graeme Wheeler is the kid , Home Alone , and the horrible nasties Ollie Newland and BigDaddy are bashing on the door , trying to get in ....

.... heh heh ... nice one , Mr Kumbel .... have a gummy-bear , buddy !

"Mr" Kumbel? That's a hell of an assumption. I could be a 16yo girl just pretending to be a curmudgeonly old man. (Or I could just be a curmudgeonly old man in real life).

... I was taking a wild guess that you're a curmudgeonly 16yo girl who wishes to spend oodles of quality time in a Thai sex-re-orientation clinic , to eventually come out as an old man in real life ...

Was I right ? .... or was I RIGHT !!! .... I was right , wasn't I !

Damn, busted.....I spose you want your gummy bear back?

A step in the right direction. Further risk could be eliminated by extending the LVR limit to all property buyer types, once prices have started tracking back to an average affordability of 3 times household income level. Up until the end of the 1970s, 65% LVR was considered the higher end of bank risk (which is why that 65% of the overall valuation figure became the standard maximum mortgage recommendation which appeared on registered property valuations right up to the modern era, despite all banks ignoring it).

The 1970's a period of great inflation and a period that proves LVR's ensure property prices move higher!!

Back in the 70's agriculture was the subsidised business of the it's housing with WFF, accommodation supplements etc, so what happens when all that political and bureaucratic interference finally breaks the camel's back.....will we slide into a deep recession?

Probably, bit of a Catch 22, eh?

I would hate to see a period like NZ experienced in the 1980's follow this foolish inflation manipulating rubbish that we have going on!!

Wasn't 20% equity was previously needed? So now 30% required - but house prices in Auckland have gone up enough to cover that in last year so this would presumably only affect future investor purchases not roll overs of current mortgages?

Roll-overs of mortgages??? That's not a thing - a mortgage is held perpetually until it's discharged, you might be thinking of a fixed rate rollover on a homeloan - that wouldn't be affected (except potentially from a pricing perspective). It would likely stop you refinancing if you didn't meet the new criteria however, so you'd be stuck with your current bank.

Loving the whining coming from the landed gentry right now... "Oh but however will I be able to house the poor now that my costs have increased. God forbid I have to exit the market and allow these creatons to buy houses for themselves.”


Well done, that man, with what little means he has to do anything at all. Ball now firmly in the govt's court and they need to step up now and do something about foreign ownership of housing, the first easiest thing they could do is remove residential housing from the Investor category for foreigners seeking residency. They allowed it to be included, they can remove it, then they can knuckle down and sort the whole issue out after that.

Truly marvellous !! .....the Awklund madness continues. This LVR increase will not make one iota of difference to this market !! The FHB's are nicely locked out of the market by the already existing 20% LVR. This move today by the RB just makes it that much harder for new PI's wanting to start or expand their "portfolio" (I hate that word !!) in the Awklund market......and to add to that, WHY would you want to buy at these prices anyway !

So in general, the screws are tightening for the local market ......BUT BOTH THE RB AND GOVERNMENT ARE IGNORING THE ELEPHANT IN THE ROOM ...THE OVERSEAS BUYERS !!!

I thought the Government were meant to be for the people that live here ! .... not for some foreign wealthy industrialist from some polluted crap hole, who wants a bolt hole for themselves and their family, with clean air & water and uncrowded conditions.

John Key and his ilk are running this country for a select group of locals and is so desparate for income, he has to open up the country for sale to the highest bidder !! .....He will NEVER acknowledge the percentage of foreign buyers in Awklund to any one, as it is not in his INTEREST to do so !! ....... Truly Marvellous !!

The RB will be watching how this plays. They will implement more draconian rules if it doesn't. Do you really think Wheeler will want to retire leaving a legacy of failure. This is just the first round in a long and difficult fight. This is not the right time for anyone to buy, be they investors or FHB.

Agreed - you'd need your head read to be buying Auckland property right now. Selling, on the other hand, that would make sense!!!

I think it's a knock out punch. Wheeler will go down as the mouse that sank the boat. Full credit to him.

"No matter what happens, prices are always going to go up"

Cue Tui

Where's Bigdaddy when you want his opinion?

Actually I take that back, I just read his article.... now I regret asking.

So its now 30% LTVR ............... well blow me !

Please remind me what happened with the much touted 20% LTVR rules that would bring prices down and stop the boom ?

Oh yes ......... nothing at all

Someone had to "get some guts" to try to do something about it, we know Key the hypocrite and his government with no guts were never going to ever upset any of their political party donors by actually addressing any real issues.

What a load of cods wallop, most property has increased 30% in the last 24 months, there's equity enough for another investment just there, if you own multiple and the bank secures borrowings across them all, well aucklands your oyster.

That doesn't change the fact that you'd be able to buy less new property at 70% than you would at 80% LVR. E.g. if your 'portfolio' (as they like to call it) is worth $5 mil and you have $3 mil of debt against it, you can buy another $1.5 mil worth of housing at 70% total LVR, compared to the previous $5 mil you could have bought at 80% LVR - that's a hell of a reduced spending spree you're afforded by your paper gains.

Wheeler's rating gets praise by many above.
Does he deserve an A?
My opinion FWIW is that he should be discounted for being :
A BIT LIGHT on the proposed action.
A BIT SLOW on implementation. He has enough staffing power to have action ready to implement
A BIT UNDERPOWERED on his approach to Government.