Call to cut rules in regional NZ
Loan-to-value mortgage restrictions should be scrapped in provincial New Zealand, the Property Institute says.
Monday, February 16th 2015, 12:00AM
by The Landlord
Property Institute of New Zealand chief executive Ashley Church said the rules were having an unreasonable and adverse impact on first-home buyers in provincial towns and cities.
The Reserve Bank policy restricts trading banks from lending more than 80% of the value of a home in all but a few cases.
Church said the need for a 20% deposit made it very difficult for a young couple to get into a home.
He said the rules were creating a "two-tier" society.
“The effect of the policy has been to close the door on a generation of first-home buyers who don’t have wealthy parents or relatives."
Church said there was considerable debate over whether the restrictions had worked in the metropolitan centres – but said there can be no debate about their impact in regional New Zealand.
“The evidence is clear that LVR restrictions have failed in the provinces. Outside Auckland, Christchurch and Queenstown, house price increases have been modest over the past 12 months – with prices in centres such as Rotorua, Gisborne, Hastings, Wanganui, and Invercargill actually going backward”.
He said the Reserve bank indicated in March of last year that it would remove the restrictions once house prices cooled.
““Our members, who include valuers, property managers and property advisers are telling us that that time has arrived for provincial New Zealand - so the Reserve Bank needs to stick to its word and drop the LVR restrictions in the regions."
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