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

 

Auckland Transport Case: Men Guilty Of Corruption And Bribery Will Spend Time In Jail

Two men who were found guilty of corruption and bribery in a Serious Fraud Office (SFO) trial have been sentenced in the Auckland High Court today... The pair are guilty of corruption and bribery offences relating to more than $1 million of bribes which took place between 2005 and 2013 at Rodney District Council and Auckland Transport. More>>

ALSO:

Hager Raid: Westpac Wrong To Release Bank Records To Police

The Privacy Commissioner has censured Westpac Banking Corp for releasing without a court order more than 10 months of bank records belonging to the political activist and journalist Nicky Hager during a police investigation into leaked information published in Hager's 2014 pre-election book, 'Dirty Politics'. More>>

ALSO:

EARLIER:

Crown Accounts: Government Ekes Out Six-Month Surplus Of $9M

The New Zealand government eked out a tiny surplus in the first six months of the fiscal year as growth in domestic consumption lifted the goods and services tax take, while uncertainties over the Kaikoura earthquake costs meant expenses were less than expected. More>>

ALSO:

Almost 400 Jobs: Shock At Cadbury's Dunedin Factory Closure

Workers at Cadbury in Dunedin are reeling after learning this morning that the iconic Cadbury factory is to close, with the loss of almost 400 jobs... “The company had reported it was doing well and this has come out of the blue,” says Chas. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news