Prime Minister John Key says he is confident the property
market will settle down, despite the Reserve Bank's new
mortgage lending restrictions.
The new rules come into effect tomorrow and will limit the
number of home loans banks can make on purchases with a
loan-to-value ratio greater than 80 per cent, meaning most
would-be owners need to have a 20 per cent deposit.
Open homes in the sub-$500,000 price range in Auckland were
unusually quiet over the weekend, apparently because buyers
knew they would be unable to close a deal before the new
rules come into force.
Speaking on Newstalk ZB this morning, Mr Key acknowledged the
changes meant people would have to save longer to get into a
"But the other side of the coin is if house prices keep going
up in Auckland by double digits every year that leaves those
first home buyers very exposed because at some point that
bubble would burst and they would have borrowed an enormous
amount of money against a property that's no longer worth
that. It's very risky.
"Overall, we'll need to let this thing run. The Reserve Bank
has the independence to do that and the Government shouldn't
interfere on that front. But I'm confident over time the
market will actually settle down and hopefully what that will
mean for these first home buyers is they'll be getting better
value for money when they buy their home."
Meanwhile, Mr Key laughed off allegations by the British
media that he breached protocol by releasing a photograph
taken during his stay with the Queen and her family at
"The ridiculous thing was we didn't actually release it - TV1
and TV3 and their camera crews were invited inside by the
Queen and I didn't release any photos.
"Any comment that we did make, it's fair to say that we were
cautious and we made sure that it was within the rules with
what we said."
On the referendum on asset sales, Mr Key said he still
strongly believed the Government had a mandate to continue
"We were extremely transparent with what we did - it was the
entire election campaign in 2011. At the time, the
then-leader of the Labour Party said the election was a
referendum on asset sales and they produced the worst result
in their history."
Mr Key has just returned from New York where he was
campaigning for New Zealand to get a temporary seat on the
United Nations Security Council.
He told Radio New Zealand that New Zealand's tough line on
reforming the council had drawn support from other countries.