Investors making up a third of bank loans

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More than a third of bank lending is going to investors, new Reserve Bank data has revealed.

Latest Reserve Bank lending data released this week has shown that, over the last year, the proportion of lending to investors has risen from 29 per cent to 33 per cent.

This has led some to believe that property investment is rampant and a major reason for house price increases.

"Rather than show that there are too many investors' buying property right now, the Reserve Bank figures show that the level of investor activity is about right," said Grant Harris, President of the Tauranga Property Investors Association.

"Rental properties account for around 35 per cent of all residential properties in New Zealand, so it is not unexpected that they should represent 33 per cent of buyers at any given time"

Existing home buyers made up the bulk of residential property buyers at nearly 60 per cent of the market.

There is currently a shortage of rental property in many main urban areas, especially Tauranga, so we need more rental properties, not fewer.

"It's important to note that rental property buyers want to pay the least they can for a property. Rental yields are low, so if the asking price gets too high, an investor will probably withdraw, leaving the field open to other buyers".