Whoop whoop – we have our finger on the pulse! The RBNZ announcement today that bank’s will be required to hold more capital on high LVR (loan-to-value) residential mortgages is a smart move in the right direction. Something I’ve been ranting about for a while. Higher capital will reduce bank profitability on high LVR mortgages.
No government has lost an election because house prices increased. This goes to the heart of why we have seen decades of government in-action. Property is an easy bet – it always wins. The only reason we now hear murmurings out of Wellington, is political awareness of the economic damage caused by higher interest rates.
There’s only so much you can write on Property Investment and Mortgages before it feels like we are going over the same old territory. Buy below market value, and focus on yield yada, yada, yada. The rules don’t really change and fundamentally what has worked for successful investors in the past works for them now.
Pre GFC, Property Developers had mythical rock star type status. The public face of the industry was full of massive egos, fast cars, illicit drugs, and self-absorbed “beautiful people.” Intelligence has never been a prerequisite to be a Property Developer. During the last property boom, money flowed so easily out of dodgy finance companies you
In a nutshell the Auckland market has become overheated. It’s a function of low interest rates, poor quality rentals, under supply, and confidence. A lack of supply is the fire, with the other conditions providing the fuel. Unfortunately, the media attention and constant headlines has a tendency to whip the market up into a bit of a