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 sold.
''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 yesterday.
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 20% deposit.
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 realistic.
''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.
