Aucklanders will now need a bigger deposit to buy houses in the region.
Provinces, watch out. More house buyers could be coming your way, now that changes have been made to the LVR (loan to value ratio) rules which favour the regions.
From October, property investors looking to buy investment properties in Auckland will need a bigger deposit than if they were to
buy elsewhere in the country.
At the same time, LVR restrictions will ease up for the regions. Outside Auckland, banks will be able to lend 15 per cent of their new loans to borrowers with a deposit of less than 20 per cent, up from 10 per cent before.
The Reserve Bank is worried that prices in Auckland are getting out of control and leave the banking system exposed in the event of a crisis that causes a house price correction.
What will Auckland investors do now? Might they look to the regions for investment bargains? Those that are sitting on some equity in their Auckland property, with good incomes and some years before retirement, continue to look to bricks and mortar as a secure form of investment. For those who are just getting started, moving their attention outside of Auckland may be the logical step.
