A survey of mortgage advisors by independent economist Tony Alexander has shown that the Government may have been too quick to disincentivise rental property providers.
The survey found that both investors and first home buyers have become more cautious in their approach to the housing market around the country.
Investors are the most cautious, with a net 46% of mortgage advisors who participated reporting that they are fielding fewer enquiries from property investors. In February only a net 5% of respondents said they were seeing fewer investors.
NZ Property Investors Federation Executive Officer, Sharon Cullwick, says that the previous increase in investor activity was likely to have been the reaction of investors buying property before the well signalled LVR restrictions for investors comes into play at the end of April.
“I think the high level of buying we have seen over the last few months was always going to come to an end when the Reserve Bank lending restrictions came into effect,” says Cullwick.
The survey results have led Alexander to conclude that “had the Finance Minister had this result and a few others like it in hand, he may have been less inclined to take last week’s step of removing tax deductions from rental property revenue”.
Everyone wants to see first home buyers get into housing. However there appears to be a widespread view from the business community, first home buyers and tenant groups that making it harder for the rental industry is not the right way to achieve this objective.
Given the lack of information on what effect the new rules will have, the reactions from different organisations, and now Tony Alexander’s survey showing that demand in the housing market may have been cooling anyway, no one would criticise the Government if they reversed their decision on removing residential rental property interest deductibility.
The New Zealand Property Investors’ Federation represents 7000 property owners and is responsible for educating and supporting landlords to ensure New Zealanders have access to high quality rental properties.
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NZPIF Executive Officer
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