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Property Institute welcomes LVR tweak

05 September 2016

Property Institute welcomes LVR tweak

Property Institute of New Zealand Chief Executive, Ashley Church, says today's decision, by the Reserve Bank, to relax Loan to Value (LVR) restrictions on investors building new homes is an important step in the right direction.

The new rules, which take effect on 1 October, mean that all purchasers, including property investors, will be exempt from the LVR rules if they are buying, or building, a new dwelling.

Mr Church said that the Institute had been pushing for this change for some time and he was pleased to see that its position had been adopted.

"We've always argued that increasing supply is the most important step towards addressing the challenges facing the Auckland housing market - but achieving that will require a massive increase in investment by the private sector".

"The previous rules provided no incentive to investors to direct their capital into the right places - but this policy change will take us a step closer toward making that happen".

However, Mr Church cautioned that the new policy was still not enough to encourage investors to start investing in new dwellings in large numbers.

"We need a massive change in investor behavior. This tweak will help, but it's not enough, on its own".

Mr Church also repeated his previous claim that house price inflation will not start to taper off until there is a significant increase in supply.

"The supply issue is fixable but it will take a co-ordinated approach by the Reserve Bank, Government and Councils to make it happen".


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