Time to stop the finger-pointing on housing
New Zealand needs a bipartisan housing accord to fix the nation's skyrocketing prices and supply problems, according to economists at ASB.
Wednesday, December 2nd 2020, 8:15AM
Senior economist Mark Smith believes changes are "well overdue", and policy experts and politicians need to come together to fix the decades-long housing market problem.
In ASB's latest economic weekly, Smith argues for an end to finger pointing, as the Labour Government, Green Party and National continue to trade blows over the nation's affordability crisis.
"The needs of the country need to come first, rather than using housing as a political football and an avenue for point scoring," Smith says.
It comes as the Government publicly called on the Reserve Bank to cool the housing market and add price inflation to its remit.
The RBNZ has already backtracked on scrapping LVRs, and is poised to reintroduce them in March.
Smith argues NZ needs to stop putting the housing crisis in the "too hard" basket.
"The blame game needs to stop, and group and self-interest needs to be parked. A housing accord is well overdue, to bring together politicians, policymakers and experts to discuss what could be done. Recommendations from this will need to have bite rather than to be consigned into the too-hard basket by central and local government."
NZ needs a "multi-faceted and co-ordinated policy approach" to tackle the housing issue, covering both demand and supply-side aspects.
"Proposed moves to add house prices in the [Reserve Bank’s] monetary policy remit may not add much in practice according to the RBNZ but they will promote transparency and a more considered view on how the housing market impacts the monetary policy outlook.
"Re-imposing the loan-to value ratio (LVR) restrictions from next March looks to be long overdue and it is good to see banks play their part in reining in some of the riskier lending. The RBNZ should also be prepared to further expand its policy toolkit to help rein in demand," Smith adds.
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