We have no fresh data on the NZ housing market this week. But here are some thoughts on whether the RB will try to control prices by forcing minimum deposit requirements upon banks.
Will the Reserve Bank try to stem the rise in the housing market by forcing banks to impose maximum loan to value ratios (LVRs) = minimum % deposits? No.
- Housing conditions including affordability and availability vary across the country and measures put in place to combat Auckland’s price squeeze would be quite wrong for a lot of the rest of New Zealand.
- Young buyers would be near completely shut out of the market as few have a deposit of, say, 30%.
- Investors would down-shift to buying lower priced properties in order to meet a lower LVR, thus increasing competition in the price range first home buyers are looking.
- Many offshore buyers (detail coming in next month’s BNZ-REINZ Residential Market Survey) tend to buy with cash. They would not be affected.
Thus the impact of maximum LVRs would basically be to prevent young NZ-domiciled Kiwis from buying property and opening up greater opportunities for offshore cashed up buyers. Now who on earth is going to vote for that?