ON THIS WEEK’S ACROSS THE DITCH bulletin to Australia’s FiveAA radio Selwyn Manning and Peter Godfrey discuss how the New Zealand Reserve Bank has intervened in an over-cooked Auckland housing market. But will it make a difference? Also, NZ’s sheep population is falling!
The Reserve Bank of New Zealand has decided to intervene in the over cooked Auckland housing market.
On Wednesday, the Reserve Bank Governor Graeme Wheeler announced banks and lenders will be required to apply a loan-to-value ratio to those seeking to finance investment properties in the Auckland housing market.
What this means in real terms is people and businesses that intend to purchase housing stock in Auckland will need a 30% deposit before a loan can be approved by a bank or lender.
The Reserve Bank also intervened to prevent banks from lending more than 10% of total loans to housing investors.
The restrictions apply only to finance on properties within the Auckland Council territorial boundaries.
The Reserve Bank Governor said:
- “Auckland’s median house price is 60 percent above its 2008 level, and house prices in Auckland have been rising rapidly since late last year. This reflects ongoing supply constraints and increased demand, driven by record net immigration, low interest rates and increasing investor activity. Prices in the Auckland region have become very stretched, increasing the risk of financial instability from a sharp correction in prices.”
- “We are proposing these adjustments to the LVR policy to more directly target investor activity in the Auckland region, where house prices relative to incomes and rent are far more elevated than elsewhere in New Zealand.
“The objective of this policy is to promote financial stability by reducing the rate of increase in Auckland house prices, and to improve the resilience of the banking system to a potential downturn in the Auckland housing market.”
The enduring problem however is that the Reserve Bank is unable to apply LVR restrictions to foreign based banks and lenders, nor, under current Government policy, can it apply restrictions on the purchasing power of offshore investors – who are in-part driving up the prices of Auckland houses far beyond the reach of every day New Zealanders.
Kiwis and sheep… We go together like Aussies and Vegemite. But new figures from Statistics New Zealand show the sheep population is fast declining, and has fallen sharply to levels not seen since 1943!
The stats show the number of sheep in New Zealand has fallen to 29.8 million as at 30 June 2014, Statistics NZ said this week.
That’s a 3 percent drop from 2013. Statistics NZ said the last time the total number of sheep was below 30 million was way back in 1943.
Statistics NZ also released figures showing the number of dairy cattle had increased 3 percent, at just under 6.7 million, with increases of 67,000 dairy cattle in the North Island and 148,000 in the South Island.
Deer numbers were hovering around 1 million, slightly down on 2013 numbers.