Investors swerve LVR impact: Report

This month's report looks in detail at the recent ANZ/NZPIF survey of landlords.

Only 16% thought the restrictions introduced a year ago to limit high-LVR lending had any impact on their investment strategies. The ANZ economists said that corroborated anecdotal evidence that other purchasers had borne the burnt of the policies. 

"A third of property investors said a relaxation of the restrictions would make them more likely to buy a property eventually, though only 13% were chomping at the bit, saying they would probably buy within six months of the policy’s removal."

The report said it seemed unlikely that the Reserve Bank would be in any hurry to remove the high-LVR lending restrictions while migration was so strong.

In the June 2014 year, Auckland’s population grew by 34,000 and Canterbury’s by 11,400. Annual net migration inflows have reached another record high nationally.

But the housing demand versus supply imbalance was beginning to slowly improve, the report said.

It said while strong demand continued, the gap was at its narrowest in 18 months. 

Consents were at a seven-year high and there had been a minor rebound in house sales.

Of the ten gauges the report uses to measure the likely direction of property prices, only migration is now pointing solely up.

Affordability, serviceability, interest rates, consents and sales, liquidity and globalisation all pointed to prices staying level or moving down.

The report said affordability had deteriorated but small drops in interest rates provided a bit of an offset. Servicing costs as a proportion of income had still risen to a 2.5-year high.

Rents had not moved significantly. After dipping in July, they have returned to the level measured over the first six months of the year. The report said they remained dislocated from supply-demand balance signals.

Overall, signs pointed to consolidation of the market, the ANZ economists said, which was at its most buoyant since LVR limits took effect a year ago.

Sixty-two per cent of investors expect to purchase another property, up from a low of 60% in 2011 but below the peak 76% measured in 2009. The growth comes from the small investors with one to three properties, rather than large investors with seven or more properties.