Investor Presentaiton

Index = 100 in 2007 House sales have slowed, stability concerns persist ◉ ☐ House prices rose rapidly in 2016. While the Auckland market lost some momentum, strong demand and tight supply provided a floor for prices in the region. Other regions such as the upper North Island and in Queenstown, are now seeing strong increases. Rising house prices and household debt prompted the RBNZ to tighten loan-to-value ratio restrictions in July. Since that time, sales have fallen by 9%. However, previous changes in lending restrictions had only a temporary impact on housing market activity. Mortgage rates have risen in response to increases in wholesale interest rates and an emerging gap between lending and deposit growth. We expect this to have a marked dampening impact on the housing market, which would reduce the need for lending restrictions (such as limits on lending based on borrowers' income which the RBNZ has been looking into). New Zealand house prices by region (index) Household debt statistics % 20 15 10 % 175 150 125 5 100 0 1999 Source: RBNZ 2002 2005 Debt servicing costs, share of disposable income (left axis) Household debt levels compared to disposable income (%) 2008 75 15 2011 2014 House sales (monthly) 220 sales sales 9,000 9,000 200 180 憂 160 140 120 Index 100 in 2007 8,000 8,000 7,000 +1.00 $7,000 6,000 6,000 5,000 5,000 100 4,000 4,000 80 3,000 3,000 Jan-11 Jan-13 Jan-15 Jan-17 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: REINZ 220 Canterbury 200 Rest of NZ 180 Auckland 160 140 120 100 80 Jan-07 Jan-09 Source: REINZ, Westpac Economics 15

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