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Regulations threaten property growth, say investors
Media Release
For release: 17 October 2014
Regulations threaten property growth, say investors
Residential property investors are still confident, growing and looking to buy more properties despite rising interest rates – but many would consider selling up in the event of proposed new regulations.
More than half (52%) of all respondents in the 2014 ANZ Property Investment Survey, released today, cite government regulations and tax as their biggest worry, up from 37% two years ago.
One in three say Reserve Bank proposals that would require banks to treat investors with more than five properties as commercial customers would impact their investment strategy – mostly by not buying new properties, or by selling. Many also raised concerns about the proposed introduction of a ‘warrant of fitness’ for rental properties.
The impact of interest rate volatility, in a year in which the official cash rate has risen 1%, was cited by one in three as their greatest concern.
Despite these concerns, investors say they expect property values to grow by 4.8%, and rents by 2.8%, in the next year.
The proportion of large/full-time property investors has grown significantly, with those owning seven or more investment properties nearly doubling, to 26%, over the past four years.
Sarah Berry, ANZ’s Head of Mortgages, said: “Investors continue to see property as an investment for the long term. The trend of holding on to properties and reducing debt gearing has continued. Twice as many investors have decreased their leverage ratios over the last year than increased them. While rising property values have contributed to this, it appears most investors are being responsible about gearing their portfolios.
“One area of concern is that one in five investors have not fully got to grips with insurers’ move to sum insured. As a result, most of these investors are accepting their insurer’s default value, meaning they could face a big loss due to underinsurance in the event of a disaster.”
ENDS
ANZ Bank New Zealand Limited
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