Decision follows launch of government’s housing package
ANZ New Zealand will review its affordability equations for property investor-borrowers following the government’s housing package announcement.
The government has launched a housing package to support first-home buyers (FHBs) into homeownership by increasing housing supply and removing incentives for speculators. The package includes access to first home grants and loans with increased income caps and higher house price caps in targeted areas, bright-line test extension, and a removal of interest deductibility loophole for future investors and phased out on existing residential investments.
ANZ New Zealand chief executive officer Antonia Watson said ANZ already has various buffers built in to its assessments. However, the bank may have to tweak them further to account for many investors who will be required to pay more tax in the future due to the new housing package.
“We’re looking into what this will mean for our current mortgage book, which at the moment is flowing to about 70% owner-occupiers and 30% investors,” Watson said, as reported by Interest.co.nz.
Watson said she believes the government’s new housing package would not solve the housing crisis. However, it will change the playing field as it impacts investors looking to buy houses.
“No government has managed to solve the housing problem because it’s fundamentally a long-term supply and demand issue. The only place in New Zealand where house prices are anywhere near normal is Christchurch, and that’s because of the massive house building programme after the earthquakes,” she said.
The changes impact the investment equation, with the bright-line test doubled to 10 years, Watson added.
“This means people’s investment horizons will change. Mum and dad investors in their 50s with spare cash might choose not to lock their money up for 10 years,” she continued.
“Phasing in tax deductibility on mortgage interest will impact some investors, but most invest for the tax-free capital gain over the long term. It could impact the affordability equation for some investors. Some investors might be forced to put up rents to cover this affordability or sell their houses. We think investors will stop and take stock.
“Encouraging more building apprentices is a great thing, and the vocational training changes the government initiated a few years ago are to be supported. The infrastructure fund for greenfields construction will hopefully make it easier for more houses to be built.”
