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Finance minister intervenes on house prices

Grant Robertson has asked the Reserve Bank governor Adrian Orr to consider house price stability when the central bank makes monetary policy decisions, amid growing pressure to curb runaway valuations.

Tuesday, November 24th 2020, 2:33PM

Grant Robertson

The move from the Finance Minister comes as critics round on the Reserve Bank for its part in record house price growth since the Covid-19 pandemic.

Record low interest rates, and the Funding for Lending Programme, have resulting in higher asset prices, boosting property valuations. The removal of loan to value ratio restrictions earlier this year is also widely believed to have contributed to price rises.

With meteoric prices raising concerns about affordability, Robertson has taken the unusual step of asking the independent Reserve Bank to watch valuations. 

Robertson said in a statement: “I have written to the Reserve Bank governor to seek his advice on possible ways the Reserve Bank can support the government to meet its economic objectives, in particular with relation to house prices. One proposal I am seeking advice from the Reserve Bank on is whether to include stability in house prices as a factor for consideration in the remit when formulating monetary policy.

“With an extended period of low interest rates, and some time before housing supply can catch up with demand, now is the time to consider how the Reserve Bank may contribute to a stable housing market. Undertaking this work is not to suggest the Reserve Bank bears responsibility for house prices, but simply that it should have regard to something that is influenced by monetary policy.

“I want to be clear I am not proposing any changes to the mandate or the independence of the Reserve Bank.

“I want to acknowledge the Reserve Bank’s approach during Covid-19 has served New Zealand incredibly well. I continue to support its independence and mandate. It is critical that it takes, as the remit asks it to, an approach that looks beyond the short term,” Robertson said.

The move comes after house prices hit record levels last month. According to REINZ data, median house prices for New Zealand excluding Auckland increased by 15.4% in the year to October.

In response, RBNZ governor Orr published his letter to Robertson. 

Orr said the central banks considered the impact of monetary policy on asset prices, and would continue to monitor high-risk lending.

A government announcement on Tuesday afternoon promised to “review housing settings”, including replacing the RMA.

Robertson said: “Our focus is on improving access to the housing market for first home buyers and ensuring house price growth does not distort the effectiveness of our overall economic rebuild – which we want focused on the productive side of the economy. 

“We have been clear about the policy responses that we are not prepared to consider, but there are other options that need to be investigated.

“Overly restrictive planning rules are one of the causes of high house prices and the replacement of the RMA is a priority to address that. We will build on the National Policy Statement on Urban Development and examine other potential barriers to affordable housing. Minister Woods is working on new and innovative ways to increase supply.

“I have also sought advice on further demand side measures that can add to the initiatives that we have already taken. I expect to receive that advice towards the end of the year, and will discuss it with cabinet as soon as possible after that,” Robertson added.

Tags: Grant Robertson house prices RBNZ Reserve Bank RMA

« How many people are still asking for home loan help?BNZ reintroduces LVR limits »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.79 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.79 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 ▼8.09 ▼7.59 ▼7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 ▼9.09 ▼8.59 ▼8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 28 March 2024 9:42am

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