The Reserve Bank will release its Financial Stability Report tomorrow which should signal the Reserve Bank’s intentions for the LVR restrictions it put in place in 2013 to try to ease the Auckland property market.
Finance Minister Grant Robertson said there had been some softening in the property market but there were still underlying issues to address, including the supply of affordable housing and some of Labour’s measures would take time to have an effect.
“We from the beginning have been concerned about the impact of LVRs on first home buyers. Obviously we’ve seen some change in the balance in the housing market between investors and first home buyers. We want to do everything we can to support first home buyers in. That remains our chief concern with the implementation of LVRs.”
The LVRs mean most home buyers need at least a 20% deposit to get a mortgage and those buying investment properties need 40% deposit.
Robertson believed the Reserve Bank would look at the effect Labour’s plans to extend the ‘bright line’ test from two to five years would have on demand, as well as Labour’s plans to boost housing supply over time through KiwiBuild.
“The issue is that they take a little bit of time to come on stream.”
National’s finance spokesman Steven Joyce said he had asked the Bank to start signalling how they would unwind LVRs in the middle of the year when he was Finance Minister. “But ultimately it’s over to them when they do that.”
“I think it is important that the Bank starts to signal under what conditions it would ease off the LVRs. There’s no doubt Auckland and Christchurch housing prices are now flat, but they will obviously be wanting to think about whether that will continue or not.”
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