Market Update 20 Oct 2025: LVR Changes Happening from the 1st of December

Giving you exclusive insights into the New Zealand property market and keeping you updated with the latest in property investment concepts.

Property market update for October 20th, 2025. You can read last week's market update here.

From 1 December 2025, the Reserve Bank of New Zealand is loosening its loan-to-value ratio (LVR) restrictions, a subtle but strategic shift that could open doors for well-prepared investors.

While the headlines might not scream “market boom,” the fine print reveals a window of opportunity for those who know how to use it.

In this post, we’ll break down what’s changing, what it means for your investment strategy, and how to position yourself ahead of the curve.

What’s Changing with LVR Rules?

The Reserve Bank is adjusting its LVR “speed limits” - the rules that govern how much low-deposit lending banks can do.

Here’s the update:

• Owner-occupiers: Up to 25% of new lending can now be done with less than a 20% deposit (previously 20%)
  

• Investors: Up to 10% of new lending can now be done with less than a 30% deposit (previously 5%)
  

These changes don’t eliminate deposit requirements, but they do give banks more flexibility to approve loans with lower upfront equity, especially for investors who are structured and ready.

Why This Matters for Property Investors

This isn’t a green light for reckless lending, but it is a signal. And in a market where many are still sitting on the sidelines, small signals can lead to outsized gains for those who act early.

What to watch:

1. More Flexibility Around Deposits

That extra 5% allowance for investor lending may not sound like much, but it can be the difference between securing a deal or missing out, especially if you’re juggling multiple properties or refinancing.

2. The Market Remains Cautious

Despite the LVR easing, other credit conditions remain tight. Debt-to-income (DTI) ratios are still in play, and rental demand in some regions is soft. That means we’re unlikely to see a sudden surge in investor competition, which plays to your advantage.

3. Less Competition = Better Terms

With fewer active investors in the market, those with capital, structure, and patience can negotiate more favourable terms. Sellers are more open to flexibility, and you may find yourself in a stronger position to shape the deal.

4. Yield Over Hype

In a market where capital gains are slower and construction costs have stabilised, cashflow is king. Look for properties that deliver strong rental returns from day one, not just long-term appreciation.

5. New Builds Are Gaining Ground

New-build properties often come with lower maintenance costs, better compliance, and lower deposit requirements. In a cautious lending environment, these advantages matter more than ever.

Strategic Moves to Make Now

If you’re looking to stay ahead of the curve, here’s how to position yourself:

• Review your deposit and debt structure: Can you secure a favourable fixed rate while maintaining cashflow with a slightly lower deposit?
  

• Target resilient rental markets: Focus on suburbs where supply is tight and rental demand remains stable, even if broader city trends are soft
  

• Prioritise new-builds or well-positioned stock: Modern compliance, strong tenant appeal, and lower upkeep costs give you a long-term edge
  

• Use the LVR shift as leverage: Even modest policy changes can shift buyer psychology. Use this to negotiate better terms or secure deals others overlook

The Bottom Line

The 1 December LVR changes aren’t a game-changer, but they are a change. And for investors who are alert, structured, and ready to move, they offer a tactical advantage.

This is the kind of moment where smart positioning pays off. While others wait for the market to “heat up,” you can be quietly securing quality assets, negotiating from strength, and setting yourself up for cost-effective growth when momentum returns.

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