Investing becoming more popular

Wednesday 5 March 2014

More people are interested in buying investment properties since the loan-to-value rules kicked in, the latest BNZ Consumer Confidence survey shows.

By The Landlord

It found a net 45% of the respondents are confident that the economy will improve over the next year.

And the number thinking about buying an investment property is increasing, despite new rules making it harder for borrowers with a small deposit – 7.6% now are mulling an investment, from 4.8% before the Reserve Bank clamped down on mortgage lending.

A net 57.7% of survey respondents expect house prices to rise in their area over the coming year. Only 35 of 553 people polled expected local house prices to decline. But the average rise expected has dropped to 4.1% from 4.7% in October.

But Andrew King, of the NZ Property Investors Federation, cautioned against reading too much into the survey results.

He said 71% of respondents to a NZPIF poll said that the LVR restrictions had no effect on their buying decisions. Although 8% said they would probably buy more property because of the LVR restrictions, 13.5% said the restrictions would cause them to buy fewer rental properties.

“I think this demonstrates that the LVR restrictions will be positive for some investors”, he said. “However it will have a negative affect on a higher number of investors who probably don't have enough equity under the new rules to make further property purchases.”

He said if more people were looking to invest, it was likely more because of positivity about the economy than LVR restrictions.

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