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Investing in Auckland vs. the rest of NZ

The Reserve Bank has announced new rules for Auckland residential property investors from November 1st. These new rules are being introduced with the aim of cooling the Auckland housing market and protecting the banking system if there were to be a sharp correction in house prices.

The new rules will also affect those living and investing outside of Auckland. Take a look at the ins and outs of the new rules below. Please note that lenders do have a small discretion within these rules.

If you are investing in residential property in Auckland*:
  • A deposit of 30% will be required for residential investment property
  • The 30% deposit requirement will not apply to loans for constructing new houses or apartment
If you are investing in residential property outside of Auckland:
  • A deposit of 20% will be required for residential investment property
  • The 20% deposit requirement will not apply to loans for constructing new houses or apartment
*Auckland defined as the Auckland council area.

To illustrate the effect of the new lending limits, take a look at the example below of someone wanting to utilise $150,000 to buy a residential investment property:

Paul is looking to start a property portfolio and buy a rental investment. He has a $150,000 deposit for his investment property and does not wish to construct a new home or apartment.

If Paul were to buy a rental property in Auckland, he could purchase a property for $500,000. By comparison, if Paul bought a rental outside of Auckland, he could purchase a property for $750,000 – this could potentially allow Paul to purchase more than one rental property.


Please note that the above example assumes that Paul meets loan service requirements.
These lending restrictions apply to registered banks only with non-bank lenders having a more liberal lending criteria. Some lenders have chosen to restrict any lending with an investment component to 70% (this includes lending on the family home).

If you would like a free consultation with a mortgage adviser to talk about purchasing an investment property or accessing equity in your home, please contact us.
Image courtesy of Graur Razvan Ionut / Freedigitalphotos.net