05 September 2016
Property Institute welcomes LVR tweak
Property Institute of New Zealand Chief Executive, Ashley Church, says today's decision, by the Reserve Bank, to relax
Loan to Value (LVR) restrictions on investors building new homes is an important step in the right direction.
The new rules, which take effect on 1 October, mean that all purchasers, including property investors, will be exempt
from the LVR rules if they are buying, or building, a new dwelling.
Mr Church said that the Institute had been pushing for this change for some time and he was pleased to see that its
position had been adopted.
"We've always argued that increasing supply is the most important step towards addressing the challenges facing the
Auckland housing market - but achieving that will require a massive increase in investment by the private sector".
"The previous rules provided no incentive to investors to direct their capital into the right places - but this policy
change will take us a step closer toward making that happen".
However, Mr Church cautioned that the new policy was still not enough to encourage investors to start investing in new
dwellings in large numbers.
"We need a massive change in investor behavior. This tweak will help, but it's not enough, on its own".
Mr Church also repeated his previous claim that house price inflation will not start to taper off until there is a
significant increase in supply.
"The supply issue is fixable but it will take a co-ordinated approach by the Reserve Bank, Government and Councils to
make it happen".
Ends