Auckland property investors are on a buying spree - snapping up more and more houses in their own city as well as almost a fifth of all the houses sold in Hamilton last month.
Property owners who own multiple houses including some in Auckland bought just under half of all the houses sold in the city of sails in June - the biggest number of investors to buy in any one month, according to data provided to the Herald by CoreLogic.
Their spending continued south of the Bombay Hills where they bought 17 per cent of all the houses sold in Hamilton, up 10 per cent from June 2014. Between 2010 and 2014, Auckland investors buying in Hamilton hovered near the 5 per cent mark but soared to 18 per cent last September.
Property Investors Federation executive officer Andrew King said Auckland investors started looking to places such as Hamilton to buy about September when the yields for rentals in Auckland were dropping. "At the same time the Reserve Bank made it harder for investors to buy in Auckland but easier elsewhere."
CoreLogic senior research analyst Nick Goodall said the rise of Auckland investors in Hamilton had come at a cost to other investors and, to a lesser extent, first-home property buyers.
CoreLogic analysis also showed Auckland investors were willing to spend as much as first-home buyers in Hamilton, Tauranga and Whangarei which pushed prices up and other investors out of the market.
"Those Aucklanders when they do go into those markets, they have been paying close to first-home buyers (who tend to pay an average of 2 per cent more than other buyers) and the reason being they've got the money because they've got their home leveraged up in Auckland and have got the money to pay a little bit more."
Jeremy O'Rourke, managing director of Hamilton-based real estate agency Lodge, said at first Aucklanders had seen more value in the Hamilton market because they could get much higher rental returns, but Hamiltonians were now realising the value of the city for themselves.
"We've seen quite a number of Hamiltonians move in the last four months and be prepared to pay for it," O'Rourke said. "There's certainly no evidence we have that Hamiltonians are being beaten by Aucklanders by price currently."
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Auckland investors also had Tauranga in their sights, with an extra 5 per cent snapping up properties in the Bay of Plenty city compared with last year. The analysis showed this had come at the expense of other investors and people moving houses.
Although Whangarei felt like an afterthought compared with Tauranga and Hamilton, Auckland investors now made up 12 per cent of the market compared with just 7 per cent in previous years.
What are LVRs?
The loan-to-value ratio (LVR) is the amount of a loan compared with the value of a property. It is calculated by dividing the loan by the property value. In 2013 the Reserve Bank introduced LVRs that meant a 20 per cent deposit was normally needed, and last year it raised that to 30 per cent for Auckland investors.
What is it now proposing?
A consultation document released yesterday proposed LVRs for investors be increased to require a 40 per cent deposit. This would apply to investors anywhere in New Zealand. Restrictions for owner-occupied lending will also be extended from Auckland to nationwide.
When will the changes kick in?
Consultation will run for a month, with the proposals officially starting from September 1. However, banks are expected to "observe the spirit" of the new restrictions immediately.
What else is on the cards?
The Reserve Bank is also progressing plans for debt-to-income restrictions, likely to be at a level to mostly affect investors. In the UK, most buyers cannot get a mortgage higher than 4.5 times their annual earnings.