20 August 2013

Reserve Bank responds to National’s housing failure

The Green Party today welcomed the Reserve Bank’s introduction of new loan-to-value ratio restrictions on mortgage lending but said it highlights the National Government’s failure to address the growing home affordability crisis.

The Reserve Bank Governor gave notice in a speech today that from October, banks will be subject to restrictions on high loan-to-value ratio (LVR) housing mortgage loans.

“We support the introduction of new Reserve Bank tools to help control runaway property prices and have been calling for their introduction for many years,” said Green Party Co-leader Metiria Turei.

“However, the Bank’s attempt to control house price rises are being undermined by the National Government’s inaction on a capital gains tax and its demand-side measures, both fuelling the home affordability crisis.

“National’s plans to expand the Welcome Home programme and ease KiwiSaver rules for home deposits will only add fuel to the house price fire, undermining the Reserve Bank’s announcement today.”

Mrs Turei said that National’s failure to tackle the policy elephant in the room – a lack of a capital gains tax – meant that speculators would continue to squeeze out first-time home buyers from home ownership.

“Under National, house prices in Auckland have risen 25 percent, making home ownership an unaffordable dream for many Kiwi families. But it doesn't need to be that way,” said Mrs Turei.

“A capital gains tax (excluding the family home) will remove the current tax-free gains property speculators can make from housing. Removing property speculators from the market will lower house prices.

“The Green Party Home for Life plan would put in place a debt-free progressive ownership model to help families afford their own homes.

“Additionally, we will build 3,000 state houses a year which will ensure families in need have accommodation and take pressure off the affordable end of the housing market.”

ENDS

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