Top Scoops

Book Reviews | Gordon Campbell | Scoop News | Wellington Scoop | Community Scoop | Search

 

Housing Finance and Infrastructure | Keith Rankin

Housing Finance and Infrastructure


Keith Rankin, 14 April 2015

The Reserve Bank acted yesterday to limit the folly of our banks in lending too much to Auckland property 'investors'. The Reserve Bank is not concerned about housing as such. Its concern is "financial stability" with particular reference to the security of our banks. So it doesn't really care about foreign money coming into our housing market directly, unmediated by our banks. That's an issue for the Government, not the Reserve Bank.

The Reserve Bank has made one huge mistake however. It defines 'investor loans' for the purpose of its new loan value ratio restrictions (LVRs) as "any retail mortgage secured on a residential property that is not owner-occupied". This means that it will be more difficult for people who wish to take the sensible step of buying an affordable rental property for financial security (and possibly with view to it being a retirement home) while renting for their own families a larger home closer to their current places of work. These people – intended owners of just one modest property – will be classed as 'investors' when clearly they are no more investors than most owner-occupiers.

Today's NZ Herald article Loan curbs will 'raise rents and hit buyers' cites the example of an Auckland couple with child who sold their Ellerslie house because they were over-extended, and sensibly planned "to buy another property in a lower-price bracket and rent it out so they are still in the market for when they retire". This is precisely the strategy that the government should be actively promoting.

The Reserve Bank should change its definition of 'investor loan' to "any retail mortgage secured on a second or subsequent residential property".

I might also note that, around 2005, the last Auckland property boom became a nationwide property boom. The signs are that this will repeat. The biggest capital gains from now may be outside of Auckland. And, as after 2008, the biggest capital losses after 2018 may also be outside of Auckland.

My final thought relates to Simon Bridges' opaque interview on The Nation (TV3) last weekend. Bridges' call for better infrastructure "alignment" was nothing less than an attempt to commandeer Auckland's future by requiring the Auckland Council to prioritise servicing the government's special housing areas (SHAs) that represent a government policy for Auckland of extensive growth. The Council has a much better policy that emphasises intensive growth, which means building quality apartments around existing transport hubs.

Auckland is a world city that must stop being forced to behave as if it's an overgrown country town.

ENDS

© Scoop Media

 
 
 
Top Scoops Headlines

 

Veronika Meduna on The Dig: Kaitiakitanga - Seeing Nature As Your Elder

The intricate interconnections between climate change and biodiversity loss, and how this disruption impacts Māori in particular. More>>

ALSO:

Gordon Campbell: On China And Hong Kong (And Boris)

In the circumstances, yesterday’s move by Lam to scrap – rather than merely suspend – the hated extradition law that first triggered the protests three months ago, seems like the least she can do. It may also be too little, too late. More>>

ALSO:

Gordon Campbell: On Ensuring Boris Gets Blamed For Brexit

Everyone needs to step back and let Johnson have his ‘no deal’ Brexit, since that’s the only way of making sure that the current Tory leadership gets to wear the consequent turmoil. More>>

ALSO:

Dave Hansford on The Dig: Whose Biodiversity Is It Anyway?

The DOC-led draft Biodiversity Strategy seeks a “shared vision.” But there are more values and views around wildlife than there are species. How can we hope to agree on the shape of Aotearoa’s future biota? More>>

ALSO:

There Is A Field: Reimagining Biodiversity In Aotearoa

We are in a moment of existential peril, with interconnected climate and biodiversity crises converging on a global scale to drive most life on Earth to the brink of extinction… These massive challenges can, however, be reframed as a once in a lifetime opportunity to fundamentally change how humanity relates to nature and to each other. Read on The Dig>>

ALSO: