Headline: Smarter approach to LVRs welcome
“A more flexible and smarter approach to LVRs will help to dampen the housing bubble without choking off new home building.”
The Reserve Bank’s decision to exempt new house construction from loan-to-value restrictions is a positive move that should help to ease the housing shortage, Green Party Co-leader Dr Russel Norman said today.
The Reserve Bank has announced today that its recently introduced loan-to-value (LVR) restrictions will no longer be applied to new construction loans. Statistics indicated, since LVRs were introduced, that there had been a sharp drop-off in planning for new house building.
“A more flexible and smarter approach to LVRs will help to dampen the housing bubble without choking off new home building,” said Dr Norman.
“New Zealand needs to build more affordable housing. The LVR exemption is welcome in that regard, but it is not a full solution. We need a Government-led programme of affordable house-building and Progressive Ownership to give families a pathway to owning their own home.
“The Green Party also want to see more flexibility for first home buyers. The evidence so far is that LVRs are locking young families out of the housing market but having little effect on wealthier investors – the opposite of what’s needed.
“LVRs can work, but they need more to be more sophisticated than the Reserve Bank’s initial ‘one-size-fits-all’ approach. The exemption for new builds is a step in the right direction. I would like to see the Reserve Bank take a smarter approach on all fronts, rather than using blunt tools that hurt the economy,” said Dr Norman.
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