Key tells Reserve Bank to 'get on with it'

Tuesday 05 July 2016 04:33 PM

Key tells Reserve Bank to 'get on with it' in imposing new lending restrictions

By Edwin Mitson

July 5 (BusinessDesk) - Prime Minster John Key has indicated he'd support a move by the Reserve Bank to try to take the heat out of the property market by raising restrictions on lending to property investors.

Reserve Bank deputy governor Grant Spencer is scheduled to give a speech on Thursday on macro-prudential policy and housing market risk. Earlier today state-owned valuer Quotable Value said property values in New Zealand were rising at their fastest pace in twelve years.

The average value of a New Zealand home rose 13.5 percent to $590,909 in June from a year earlier, ahead of May's 12.4 percent annual gain. In Auckland, the average house price is just below $975,000.

Key said that he had received no signals from the Reserve Bank about the introduction of new restrictions. He said property investors were needed to provide rental properties "but my sense is potentially one of the risks is you have got people buying rental properties at the moment, borrowing more money but fearful that the Reserve Bank is going to move. If they are going to make changes, probably they should just get on with it."

Reserve Bank measures imposed last year because of fears about the booming Auckland market mean property investors can't borrow more than 70% of the value of a house in New Zealand's biggest city.

Quotable Value said 46 percent of Auckland house sales were to investors, up from 37% in 2012, citing CoreLogic data.

(BusinessDesk)

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