we estimate they could account for around one - third of the 30, 000 auckland house sales in the past year 1. interest rates are also an important factor influencing the demand for and pricing of housing, particularly long - term rates. interest rates determine the cost of mortgage credit and therefore the amount of debt that can be sustained on any given level of household income. figure 2 shows how low interest rates since the gfc have facilitated a significant increase in debt to income ( dti ) ratios. interest rates also drive the discount rate used ( implicitly or explicitly ) by house purchasers in valuing the future stream of housing services. as seen in many countries around the world, low global interest rates post gfc have contributed to strong asset price growth, particularly in financial assets and in housing markets. this influence on house prices in new zealand is reflected in the downward trend in rental yields ( figure 3 ). while the sharper yield decline in this estimate is based on the assumption of around 3 people per dwelling and a home ownership rate of around 60 percent. bis central bankers ’ speeches auckland points to additional factors at play in the auckland market, interest rates have been a key driver of demand, particularly investor demand. it is useful to distinguish investor demand from owner occupier demand. while increased occupier demand, say due to population growth, adds to any underlying physical shortage of housing, higher investor demand affects the composition of rentals versus owner occupiers. however, investor demand can contribute significantly to house price pressures. if investors wish to expand their housing portfolios at a greater rate than the growth in demand for rental accommodation, this can push up prices even though the underlying housing shortage remains unchanged. investor demand has become a growing factor in the auckland market over the past year, and this has exacerbated price pressures arising from the underlying physical shortage. evidence of an increasing investor presence in the auckland market is clear. based on corelogic data, investors accounted for 41 percent of all auckland market sales in june 2015, up 8 percentage points since late 2013. while some of this growth was at the expense of first - home buyers in early 2014, the more recent increase from late 2014 has been at the expense of “ movers ”. a similar pattern is seen in net investor purchases 2 ( figure 4 ), which has also increased significantly, suggesting further declines in the auckland home ownership rate. consistent with the increased share of investor sales, there has been a disprop

to overcome their heavy reliance on bank credit. the business sector needs to find other means of financing investment. on the other hand, it is in the banks ’ interest to keep a balance between loans and deposits, and to share with the markets the risks of lending to customers. helping businesses access the capital markets is not an easy task for the banks, requiring the ability to assess firms ’ economic and financial prospects ; care must be taken to avoid potential conflicts of interest. our supervision, conducted both off - site and on - site, reflects our concern for the trends in lending and credit quality. its purpose is to make sure, in particular, that impaired loan coverage ratios are adequate, and are increased whenever necessary. far from damaging the banks, it helps to strengthen them, reassuring the markets as to the quality of their assets. the findings of the inspections carried out between the end of 2012 and the early months of this year are set out in a report published on our website. we are verifying that the corrective measures, including organizational ones, which the banks were asked to take have been promptly put in place. meanwhile, work to verify the adequacy of coverage ratios continues, in some cases also taking in the whole credit portfolio. the opinion, voiced repeatedly during the crisis, that italy ’ s banking system stands in dire need of recapitalization is unfounded. only a few days ago the international monetary fund published the results of its periodic financial sector assessment program for italy. it acknowledges that the italian banking system has managed, overall, to weather the doubledip recession and the sovereign debt tensions, extending its solid deposit base and strengthening its capital. unlike other countries, it has succeeded, notwithstanding the difficult conditions, in raising additional funds almost entirely on the capital market, without burdening public finances and heightening sovereign risk. the banking system ’ s resilience was aided by a model of supervision, regarded by the imf as a pillar of financial stability, which adheres closely to established international standards and is based on intense and strict oversight. the imf also recommended that steps be taken to improve the effectiveness of supervision in some specific areas : transactions with related parties, the requirement for shareholders and corporate officers to act honourably and professionally, and the power to impose corrective measures such as the removal of company directors and executives. the crisis management and resolution system has been effective, making it possible to address the effects of the crisis without affecting the stability of the system. the im