Manawatu Property Investors' Association

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Young people more interested in investing: Alexander

Young people are turning into investors rather than first-home buyers because of the loan-to-value restrictions, BNZ chief economist Tony Alexander says.

Banks now must keep their low-deposit lending to no more than 10% of new loans.

Alexander said that had not severely dented the housing market yet, although lending approvals were down on the year before.

He said there were a lot of investors entering the market for a variety of reasons, and many of them were young people who were still renting themselves.

Young people knew that prices were rising strongly and there was a shortage of property in Auckland in particular, he said. They were opting to buy properties as an investment and rent them out while continuing to rent themselves.

They would then sell the property in future when the capital gain could be used as part of the deposit on a property to live in.

“That is why the Auckland inner city apartment market is going to boom. Young people want to get their foot on the ladder and the neatness and lower price needing to be paid for an apartment as opposed to a house and all the maintenance and landlord-type issues that brings makes buying an apartment as an investment very attractive.”

He said more young people would be interested in joining investment groups and would look to their parents to help them secure a deposit on an apartment.


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