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Govt plans to pump up housing market

Tuesday, February 12th 2008, 9:27AM 2 Comments

by Philip Macalister

The government made two big housing announcements today – one about housing affordability and the other about a shared-equity scheme for wannabe home-owners.

Clearly the ideas are aimed at winning votes as they are aimed at helping Kiwi’s achieve that great New Zealand dream of becoming homeowners.

However, the ideas are full of interesting ideas and irony.

Firstly, it’s very curious that the central bank is trying to slow the housing market down, yet the government is doing things which most people seem to see as being stimulatory to the market.

One point I struggle with is what is this affordability issue about? As mentioned before it is about how much people earn, what mortgage rates are and house prices.

Whichever way you look at this issue it is absolutely clear that incomes aren’t sufficient to pay the mortgage on a house with prices where they are.

Yet we keep hearing the answer is things like making more land available, or changing things like the Resource Management and Building Acts.

While they may have some impact, they are not the crux of the matter.

So the PM’s announcement that more land will be made available seems like a sop to the very vocal lobbyists.

At least property investors can see some benefit in the idea.

The other initiative from the government is a shared equity scheme, where the state helps people into houses by sharing the equity.

This idea has lots of merit, as well as a touch of irony because the government will now be far more involved as a property investor.

As an investor, no doubt it wants to see house prices rising, just like other landlords!
« Housing market screeching to haltIs there a place for Blue Chips? »

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Comments from our readers

On 10 March 2008 at 5:05 pm Hamish said:
I think the shared equity scheme is not the most intelligent of ideas. So you introduce a whole bunch of new buyers to a market toping up their buying power by about the same as you end up in directly raising the price by due to the new buyers creating more demand.

Helping developers to get their job done might be the best bet, introduce more supply and the price should decrease. I don't think the government should waste anymore money on coming up with new structures to keep people addicted to the government. If there is extra money for these schemes, great cut the taxes. This is probably the most efficient way of getting the money back where it is needed.
On 10 July 2009 at 5:47 pm Rod Philson said:
There are two factors slowing the property market rebuilding and they are job security and general uncertainty. People are reluctant to borrow until they feel secure in their jobs.

Any indicators showing positive factors in the job market and an upturn in the property market are welcome.

The banks are loaded with pre approved loans for property purchases but borrowers need to take the loans up.

First home buyers, and investors will not see a better time to buy than now.

We have low interest rates.
We have reduced prices - in some cases up to 20% in the last 18 months.
We have tightened banking lending requirements which are showing signs of easing - some banks are back to 80 - 90% loan ratios.
We have first home owner benefits.
We have capacity to build new homes immediately at present.
And we have positive immigration.

as a result there will be a shortage of homes in NZ by the end of the year(2009) and prices will start to rise once the spring selling season begins in September.

If the government is prepared to stimulate the housing market in any way it is for the benefit of the economy and we all know that the rub off will firm up job security in the building industry which is in need of some assistance right now.
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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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