Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Call for immediate relief from LVR for some regions

Call for immediate relief from LVR for some regions

The chair of the Wellington region's economic development agency, Grow Wellington, has called for the immediate removal of the Reserve Bank's Loan-to-Value Ratio limits from some regions, and reconsideration of other economic interventions from a regional perspective.

Paul Mersi says that the Reserve Bank’s recent confirmation that its LVR policy seems to have been effective in reducing house price rises and household credit growth is very bad news for cities and towns outside of those whose over-heated markets led to the imposition of the policy.

“For any town, city, or region within New Zealand not 'suffering' from an over-heated property market or high household credit growth, a nation-wide policy such as the LVR is like having a bucket of cold water poured over you on a wintery day.”

Mr Mersi says that while the Reserve Bank’s main monetary policy tool, the OCR, can’t be applied regionally there seems to be no obvious reason why LVRs, for example, could not be restricted to certain regions, and done quickly.

"With a flick of a pen, the Reserve Bank could restrict its LVR policy to loans secured on properties situated in those areas of country which it has concerns about. Those areas can be readily defined by existing local authority boundaries and the banks know the addresses of the mortgaged properties, so it should be simple.”

Such a change would have the added benefit of providing an extra incentive to those buyers with relatively low deposits to look further afield than the over-heated areas, thus helping to reduce the pressure that those areas of the country are currently under.

Mr Mersi is also disappointed that given the obvious and long-standing disparity in the economic pressures (or lack thereof) between different regions within New Zealand, assessing the regional impact of central government economic interventions and policies is not mandatory.

“For example, the Reserve Bank’s recently expressed view that LVRs have had an effect on reducing house price inflation and household credit growth seems to be based on the national position. It is disappointing that there seems to have been no attempt to determine the impact that the policy has had either in the cities or regions that triggered the need for the policy, or on the rest of New Zealand where such impacts are the last thing they need.”

Mr Mersi believes that this issue is not just about the appropriateness of a nation-wide LVR. He would like to see a regional analysis undertaken for all central government economic interventions.

"Where there are regional issues impacting on the New Zealand economy overall, government interventions should be restricted as far as possible to the cities and regions where the issues are sourced. New Zealand as a whole is worse off when everyone is forced to take medicine that should only be appropriately prescribed for a few.”

Ensuring the economic interventions of both government and its agencies are appropriate for “all of New Zealand” should be a key focus of the government's regional economic development strategy.


Paul Mersi
Paul Mersi is chair of regional economic development agency Grow Wellington. A business advisor and director, he has had a successful professional career as a senior Financial Services and Tax Partner with PricewaterhouseCoopers, and was a member of the Government’s Savings Working Group. He has also worked in the OECD in Paris, and served for a number of years in a senior policy role in the public sector. Paul has a degree in economics from Victoria University.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Bad Day For Rope: Donaghys Job Losses Another Blow To Dunedin

The loss of 30 jobs from Donaghys rope and twine factory is yet another blow to the people and economy of Dunedin, says Dunedin South Labour MP Clare Curran. More>>

ALSO:

Oil: 2014 New Zealand Petroleum Summit

Simon Bridges: Our abundance of energy and minerals resources provides us with unique opportunities to build the New Zealand economy.

Over the past three years the Government has made significant changes to how the sector is regulated. More>>

ALSO:

WWF Report: Solutions In Reach; World Biodiversity Suffers Major Decline

Global wildlife populations have declined by more than half in just 40 years as measured in WWF's Living Planet Report 2014. Wildlife's continued decline highlights the need for sustainable solutions to heal the planet... More>>

ALSO:

Scoop Business: NZ Dollar Catches Breath After "Goldilocks" Slump

The New Zealand dollar edged up following its dramatic slump yesterday after the Reserve Bank confirmed speculation it intervened in the currency market last month and PM John Key suggested a “Goldilocks” level far lower than at present. More>>

ALSO:

Biosecurity: Kiwifruit Claim To Hold Officials Accountable For Psa

Kiwifruit growers have joined forces to hold Biosecurity NZ accountable in the courts for its negligence in allowing 2010’s Psa outbreak that devastated New Zealand’s kiwifruit industry and exports. Foundation claimants representing well ... More>>

ALSO:

Poison: Anglers Advised Not To Eat Trout In 1080 Areas

With the fishing season opening in just a few days (1 October 2014), anglers are being warned by the Department of Conservation(DOC) not to eat trout from pristine backcountry waters and their downstream catchments, where the department is conducting 1080 poisoning operations. More>>.

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news