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

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news