Tenants and first home buyers will suffer if tougher new invesor lending rules are introduced, says a landlords group.
Andrew King, Property Investors' Federation executive officer, expressed concerns about the potential for investors to need deposits of nearly $400,000 the average Auckland home, as the Government urges stricter rules on borrowing for investment properties
"With extra costs and restrictions being placed on rental home providers, all we are achieving is higher rental prices - which make it harder for first home buyers to save a deposit. We are seeing people living in cars and in overcrowded conditions. These people need rental homes not rental price increases," King said.
Grant Spencer, Reserve Bank deputy governor, will later today give a speech on housing where he could signal increased "loan to value ratios" for property investors.
That follows Prime Minister John Key indicating strong support for such a move this week.
Asked if he was keen for the central bank to consider extending loan to value ratios above the 30 per cent limit in Auckland, Key said: "My own view is [they] should make some movements in that area, yes."
Key spoke after Quotable Value's monthly housing report this week showed renewed value surges nationally and in Auckland.
King said life was getting increasingly harder for landlords.
During the past year, they had been "stung" by higher LVR ratios, higher risk weighting requirements and the new Bright Line Test, King said.
"There comes a point when you have to ask, if all these measures aren't slowing house price growth perhaps we are shooting at the wrong target," King said.
King also dismissed concerns about the high number of sales to investors.
"QV states that 46% of sales in their latest report were to investors, but around 42 per cent of all Auckland properties are rentals, so this is not unexpected," King said.
"New Zealand rental properties are mostly owned by accidental investors, who often sell up when circumstances change. For instance they could have transferred for work and rented out their old home before committing to the new location. They may have bought it to provide a home for children attending university or inherited the property and after a while need to sell it. This means that rental properties tend to turn over faster than owner occupied homes and therefore make up a higher percentage of overall sales," King said.
"In addition to investors, QV said that house prices are continuing to be driven by low interest rates and strong net migration. The current levels of migration are the highest ever recorded. When combined with a property supply system that is particularly slow and expensive, this is the main reason why prices are going higher," King said.
Nick Kearney, a North Shore lawyer, also raised concerns.
"This will mean only very wealthy people will be able to afford investment properties - the 1 per cent. The very wealthy will then own a majority of investment properties and rent them to the working class," Kearney said.