Headline: Don’t hit first home and low income house buyers
“The CTU welcomes the Reserve Bank’s decision to begin using macro-prudential policies with its announcement that it will require banks to have higher capital requirements for loans with lower deposits”, says CTU Economist Bill Rosenberg.
“However the way it is doing it creates a risk that first home buyers and low income families will find it even harder to buy a house. It needs to be targeted to ensure it cools housing prices in Christchurch and Auckland without collateral damage. It should focus on properties purchased for investment purposes, higher cost houses and house prices in those two centres,” Rosenberg said.
At the same time, the Government should be announcing measures to assist low income families and first home buyers, to increase the construction of new houses and to increase provision of low cost, good quality rental housing through the Housing Corporation and local government.
“It is a problem that the Reserve Bank is focusing on reducing financial system risk rather than on reducing house price inflation. That makes it a blunt instrument as far as home buyers are concerned,” said Bill Rosenberg.