Market slowing, ANZ says
Cooling in the Auckland property market is likely to be longer-lived this time, ANZ’s economists say.
Since the new lending restrictions on property investors were announced in the middle of the year, there has been a noticeable slowdown in turnover in Auckland. Investors now need a 40 per cent deposit to purchase rental property.
Price inflation has decelerated from double digits around 5 per cent year-on-year in Auckland, according to MyValocity, compared to more than 20 per cent in Tauranga and Hamilton. Some commentators have said the market slowing is just another blip. There were quieter periods when loan-to-value restrictions were first introduced in 2013, and then when new rules were brought in specifically for Auckland investors in 2015. Each time, it recovered and took off again.
But ANZ’s economists said there were reasons to believe the slowdown this time was more likely to be lasting. ‘‘ Now that should not be confused with us saying we are expecting a correction or anything like that,’’ they said.
‘‘Valuations are certainly stretched and risks have increased, but outright weakness is hard to envisage when net migration flows sit at records, supply is responding only slowly, interest rates remain historically low and the underlying economy is still performing well.’’