REINZ Acknowledges Reserve Bank Action On Auckland

REINZ Acknowledges Reserve Bank Action On Auckland

REINZ is pleased by today’s announcement by the Reserve Bank of New Zealand to differentiate between the Auckland real estate market and the rest of the country, with the decision to relax LVR restrictions on first home buyers outside of the Auckland region. In 2013 REINZ advised the Reserve Bank to consider a regional approach to the introduction of LVR restrictions before the policy was formally introduced on 1 October 2013.

However, REINZ notes that the restriction of high LVR lending in the Auckland region has not had a measurable impact on the increase in house prices since the policy was introduced, given that demand is clearly outstripping supply.

Real Estate Institute of New Zealand (REINZ) Chief Executive Colleen Milne says, “the rapid increase in dwelling prices in Auckland has been concerning policymakers for some time, thus this move by the Reserve Bank is an acknowledgement that demand is clearly outstripping supply in the Auckland region. The relaxation of high LVR lending in the regions is welcome as it has been the regions, far more than Auckland, that have felt the impact of the LVR restrictions on home lending.”

“However, it is clear that supply is the key issue for Auckland with the number of listings failing to keep pace with the number of sales across the region. Although new dwellings are being built across the city the rate of development is currently fast enough to meet demand; hence prices are continuing to rise. Sales in the Auckland region increased almost a quarter between April last year and April this year, however, the number of new listings combined with the number of dwelling consents issued lags well behind.”

“While we consider that these moves by the Reserve Bank to limit lending to investors will have some effect on house prices in Auckland, the basic problem of not enough supply remains unresolved.”

ENDS

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