The Reserve Bank's decision to impose a 40% deposit on housing investors across the country should stimulate interest in buying new houses "off the plan'', and underpin more work for the construction sector.
The Reserve Bank last week increased its loan to value ratio restriction (LVR), which formerly had Auckland-only investors paying a minimum 30% for deposits, but increased that to 40%, applying to all investors across the country.
New build homes remained exempt from LVRs.
In June $6.8billion was borrowed for all mortgage types. Owner-occupiers borrowed $3.42billion, investors $2.56billion and first-home buyers $738million, Reserve Bank monthly data showed.
Colliers International's director of residential project marketing Jeff Davidson said the 40% LVR deposit would encourage new housing supply by pushing buyers towards off-the-plan projects.
"This is a distinct advantage, alongside the many other advantages of purchasing off the plan, which in many cases requires a deposit of as low as 10%,'' Mr Davidson said.
First-home buyer borrowing in June of $738million was 27% up on June last year, but well below April borrowing of $789million and $833million in May.
Mr Davidson was pleased with the Reserve Bank's decision to maintain the new dwellings' exemption and off-the-plan purchases, as it would provides people and investors with an alternative avenue of getting on to the property ladder.
"This exemption will help to support the supply of new housing and in doing so, reduces some of the pressure arising from excess demand in our housing market,'' he said.
Mr Davidson said the arrangement was good for the development and construction sectors.
Under the 40% restrictions, a median priced Auckland property valued at $821,000 would require an investor to come up with a $328,400 deposit, which was "unfeasible for many''.
"This kind of money is not practical for many people, which makes off-the-plan purchases far more palatable,'' Mr Davidson said.
He said with a deposit as low as 10%, a property could be secured and purchased at a fixed market price, rather than an unknown figure in an auction process.
Purchasers would benefit from buying at the price on the day, settling in 18-24 months, making time to arrange finances and to sell existing property.
"Purchasers also benefit from buying brand new properties which are built to updated building codes, using upgraded materials and technologies and boast the latest design features,'' Mr Davidson said.
He said the banks and regulatory policies were fuelling more interest in off-the-plan purchasing, in promoting apartments and homes with lower deposits generally required for investors and owner-occupiers.
