Leading new-home builder Jennian Homes is calling on the
Reserve Bank to quickly amend its contentious loan to value
ratio (LVR) on bank lending, estimating new home-buyer
restrictions equate to the loss of 3000 homes.
Jennian Homes director Richard Carver said new-home buyers
should be exempted because the restrictions were now causing
a ''dramatic reduction'' in the number of new houses being
''We predicted this and now it is happening,'' he said.
He estimated up to 15% of national building consents could be
negatively affected by the new restrictions, equating to
about 3000 new homes, based on current consent forecasts.
''The building industry has weathered the worst downturn
since records began. The latest move with low equity mortgage
restrictions is now dramatically slowing recovery where it's
most needed, which is first-home builders,'' Mr Carver said
The implementation of LVR on October 1 by the Reserve Bank
restricts all banks from lending any more than 10% of their
entire loan book to people who do not have a minimum 20%
deposit, in an attempt to quell rising house prices. However,
this has locked out many first-home buyers as their deposits
are now well short of the 20% minium required.
Mr Carver accused the Government of ''hiding behind the
Reserve Bank's neutrality'', while the Kiwi dream of home
ownership slipped further from the grasp of those without a
Mr Carver yesterday said while New Zealand had a housing
shortage, which was contributing to escalating house prices,
to further restrict residential construction did nothing to
close the housing gap.
He was pleased to see the Reserve Bank was finally starting
to listen to the industry and might review the LVR scheme,
especially in relation to first-home owners.
''We strongly encourage the Reserve Bank to act swiftly and
exempt new house construction from the LVR regulations as
this will increase the supply of new houses that are
desperately needed,'' Mr Carver said.
The Reserve Bank action placed the Kiwi dream of home
ownership on the backburner for many young New Zealanders.
Last week Reserve Bank deputy governor Grant Spencer said LVR
was aimed at moderating house-price inflation by reducing the
effective demand for housing.
''While they should help reduce house price inflation, New
Zealand house prices are likely to remain high on most
metrics. In this sense it is hard to see how LVR restrictions
will materially reduce the existing incentives to develop new
residential property,'' Mr Spencer said.
Mr Carver noted that while the Government promised 39,000 new
homes in Auckland during the next three years, this was not
''Increasing the supply of land might help, but where is the
logic in restricting the supply of new houses?''
Even if land was made more available, developers would not
reduce the price of the land, so the cost of bringing the
land to market would remain the same, Mr Carver said.