A roller-coaster ride for investors

01 January 2020

Property investors had a roller-coaster ride through 2019 with the government stepping up its reforms of the Residential Tenancies Act (RTA), interest rates falling and rents in provincial centres playing catch-up.

The ANZ Bank’s Property Focus notes that mortgage rates fell as the Official Cash Rate (OCR) was cut 75 basis points in the second half of the year, and evidence mounted that the housing market was tightening in response.

Nationally, house price inflation rose 3.3% year-on-year in October from a low of 1.6% in June. The year ended with most regions displaying evidence of some tightening but ANZ said that overall, prices had been picking up across most regions.

Investors remained wary and there was little change in new borrowing for rental properties. About 19% of new loans were to investors in September, down from a 2018 average of 22% and well below 2016 peaks of almost 35%. The share of investor lending on riskier terms remained low with more than 85% at loan-to-value ratios (LVRs) of less than 70%.

New healthy homes standards announced in February as part of the Residential Tenancies (Healthy Homes Standards) Regulations 2019, became law on 1 July 2019. The standards spell out landlord responsibilities for heating, insulation, ventilation, moisture ingress and drainage, and draught-stopping.

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