Investor activity subdued in April

Friday 24 May 2019

Investors borrowed just $988 million in April, down from $1.26 billion in the same month last year, according to new figures from the Reserve Bank.

RBNZ's April data shows investors took $988 million of the $5.4 billion lent for New Zealand home purchases. The weak numbers follow a slight resurgence in April, when investors borrowed $1.09 billion.

May's figures are likely to be stronger, after the government abandoned plans to introduce a capital gains tax last months. But ongoing LVR curbs on investor borrowing, and other proposals, such as a move to strip investors of their right to offset rental losses from their income, have dampened activity.

First home buyers continue their strong streak last month, borrowing $964 million. First home buyers borrowed $868 million in April last year.

FHBs have narrowed the gap on investors over the past year. Investors borrowed just $24 million more than the group in April.

The total $5.4 billion borrowed for New Zealand properties was slightly up on April 2018, when banks lent $5.30 billion.

Movers had a strong month in April, borrowing $3.4 billion, up from $3.1 billion in April 2018. #

Real estate research firm CoreLogic said the total figures were "solid", as the month coincided with the Easter break and ANZAC day. The firm notes banks are still operating within LVR speed limits, and interest-only lending remains "contained". 

Kelvin Davidson, Senior Property Economist at CoreLogic, added: "Investor lending continues to edge down on a year-on-year basis. As part of the rise in owner-occupier lending, high loan to value ratio (LVR) lending to first home buyers (FHBs) continues to grow, albeit there’s been an inevitable slowdown from the previously very rapid rates."

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