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Robertson to require the RBNZ to consider house prices when setting monetary policy and through the way it regulates banks; Seeks more info on DTIs and interest only mortgages

Robertson to require the RBNZ to consider house prices when setting monetary policy and through the way it regulates banks; Seeks more info on DTIs and interest only mortgages
Grant Robertson. Getty Images.

Finance Minister Grant Robertson has decided to require the Reserve Bank (RBNZ) to consider the impact its monetary policy decisions have on house prices.

The Monetary Policy Committee's main objectives remain targeting inflation and employment. 

But a new clause in its remit will require it to “assess the effect of its monetary policy decisions on the Government’s policy”.

The remit stipulates the "Government's policy" is to "support more sustainable house prices, including by dampening investor demand for existing housing stock, which would improve affordability for first-home buyers”.

Robertson explained the Committee can decide "whether and how its decisions take account of potential housing consequences, but it will need to explain regularly how it has sought to assess the impacts on housing outcomes”.

The new remit will take effect on March 1. 

The New Zealand dollar jumped on the news from 74 US cents to 74.5 US cents, reaching its highest level since August 2017.

The Monetary Policy Committee yesterday stressed "prolonged" monetary stimulus was necessary. It said it would keep interest rates low until it is confident inflation is "sustained" at 2% per year, and employment "at or above" its maximum sustainable level.

Direction issued around financial stability 

The RBNZ vocally opposed Robertson’s proposal late last year to require it to consider house prices when setting monetary policy, arguing it would rather be made to consider house prices through the way it regulates banks.

Robertson decided to move on this too.

A direction has been issued to the RBNZ (under section 68B of the Reserve Bank Act) requiring it to have regard for the Government's housing policy when carrying out its job maintaining financial stability. 

RBNZ Governor Adrian Orr, in a statement, reiterated a comment he's made a number of times that the RBNZ's actions are among "many" that influence house prices. 

Robertson considering restricting the use of interest-only mortgages 

Robertson asked the RBNZ to provide advice on restricting borrowers' debt-to-income ratios and interest only mortgages.

“I want to understand the extent to which interest-only mortgages (particularly to speculators) pose risks to financial stability, and whether restrictions should apply," he said.

"Some jurisdictions, like Australia, have in the past applied restrictions on interest-only mortgages due to financial stability risks."

Debate over targeting DTIs

Robertson didn't submit to the RBNZ's request for it to be given debt-to-income (DTI) ratio tools, enabling it to restrict bank lending to prospective property buyers seeking a lot of debt relative to their incomes. 

Rather, Robertson asked the RBNZ to explain how it might use such tools.  

"I have made clear that in principle I would want these to apply only to investors," Robertson said.

"It’s important that any potential restrictions do not disproportionately affect first-home buyers and low-income borrowers."

Comments Orr made to media earlier this month suggest he doesn't share Robertson's view. 

Asked by a journalist whether DTIs could be targeted to investors, Orr said: “It is incredibly difficult to segment any market and any individual with macro-prudential tools.

“The phrase “macro” means it’s the same tool for all. So, pretending we could fine tune for a particular set or groups comes with great challenge and implications.”

The RBNZ has however applied more onerous loan-to-value ratio (LVR) restrictions on residential property investors than it has on owner-occupiers, requiring them to have larger deposits when taking out mortgages. 

More to come from the Govt on housing

Robertson said, “Today’s announcement is just the first step as the Government considers broader advice about how to cool the housing market.

“We know the rapid increases we have seen in recent months are not sustainable, which has meant many first-home buyers are struggling to access the market. We’ll be making further announcements in the coming weeks on other policy responses.”

Here is a snippet from the new Monetary Policy Committee remit:

1. Monetary policy objectives

Under section 8 of the Act the Reserve Bank, acting through the MPC, is required to formulate monetary policy with the goals of maintaining a stable general level of prices over the medium term and supporting maximum sustainable employment.

2. Operational objectives

(1) For the purpose of this remit, the MPC’s operational objectives shall be to:

(a) keep future annual inflation between 1 and 3 percent over the medium term, with a focus on keeping future inflation near the 2 percent mid-point. This target will be defined in terms of the All Groups Consumers Price Index, as published by Statistics New Zealand; and

(b) support maximum sustainable employment. The MPC should consider a broad range of labour market indicators to form a view of where employment is relative to its maximum sustainable level, taking into account that the level of maximum sustainable employment is largely determined by non-monetary factors that affect the structure and dynamics of the labour market and is not directly measurable.

(2) In pursuing the operational objectives, the MPC shall:

(a) have regard to the efficiency and soundness of the financial system; and

(b) seek to avoid unnecessary instability in output, interest rates, and the exchange rate; and

(c) discount events that have only transitory effects on inflation, setting policy with a medium-term orientation; and

(d) assess the effect of its monetary policy decisions on the Government’s policy set out in subclause (3).

(3) The Government’s policy is to support more sustainable house prices, including by dampening investor demand for existing housing stock, which would improve affordability for first-home buyers.

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A good move albeit possibly a little (like in a decade) too late.

it is either another wish which will never be implemented , OR the end of a classic bull trap in the market


Very vague move, what does it even mean for RBNZ? What's the definition of 'sustainable' for example?

Further more, how much more advice does Robertson need... it's all we ever hear from Roberston & Co.

Good point. "Sustainable" as a word, has been weaponised by political factions. It sounds good to the naive but it is loaded against discussion of alternative ideas.

Martin North has something to say about this

For the impatient, everything up to 11.20 is a review of the various statements and the history of RB resistance to the policy change now in place.
Then Martin finally goes off: "This is a mess frankly...". 3 points:
1) CPI is understated (does not fully reflect cost of housing)
2) RB has released taps too far and fast and been surprised
3) Impact on FHBs disgraceful. Those who bought at peak likely to be left stranded
But he concludes central banks probably won't be held accountable.


We have a young family member (28) who has just been panicked into paying a quarter of a million dollars more for his solitary home, than the same house would have cost him 6 months ago. (Anyone whose been in a market like this knows what pressures The Industry will put on buyers to sign on the dotted line "Or. We have 70 other buyers who will" etc)
The contract has all the usual escape clauses and is due to go unconditional next week.
Tell me Grant:

Should he confirm the contract or wait until you tell him what the final conditions are that will apply to the market after that?

You, and the RBNZ, have had months; years, and your predecessors have had decades to enact meaningful change. And yet you want the current crop of transactors (on both sides of the contract) to guess at what may, or may not, happen 'soon'.

Bold, Grant, bold.....


You'd have to be very nervous if you are about to sign up. Once this barrage of restrictions come in...good luck in selling it again.
I'd wait till the thick throws of winter kick in, on top of all the handbrakes coming, it will be a different market. Crazy to buy in summer and in a hyper market anyway.

We're only getting started. When the RMA replaced by three separate acts you'll be able to build a house using all the additional legislation.

You are rightly concerned; FHB currently live in very, very uncertain times.
I am of the belief that as homeownership is long term, short term market fluctuations are less important consideration compared to one's ability to service a mortgage but I am now very concerned just where the housing market is at.
Late last year, due to affordability I thought house prices might start to stabilise this year (especially as the winter season set in) followed by a long period (5+ years) of fairly stable prices with some correction and that there was no need for alarm.
However, I am now becoming increasingly alarmed especially with RBNZ prediction of 22% rise this year followed by a fall as much as 10%. Last year at the onset of Covid, RBNZ estimate was for a 10% fall - however their and Government actions have seen a very different outcome.
The RBNZ view that prices could increase by 22% - and being so far out a year ago - the market is seemingly now exceptionally volatile and very, very uncertain and seemingly out of control.
For the first time ever, I feel that FHB need to think very deeply and be very cautious.

As they were a year ago and lost 120k +interest

Really interested to hear your opinion on this P8. I have noted your strong encouragement in the past that there is no time like the present (to paraphrase various comments). With great interest I acknowledge your current stance and will probably pass on advice to others in a similar vein. I have best friends who missed out on an Auction yesterday, and wonder whether that may have been a blessing in disguise. Although we are in the Northland market, which lags behind the increases experienced elsewhere in the country (however has still been subject to astronomical increases).

Never considered myself a spruiker but I have been concerned that too many comments here are based on the short term outlook of the market whereas homeownership (and even rental property) is about long term - the key consideration for FHB should be the ongoing ability to service the mortgage.
I really feel that after this period of rapid house price inflation that there are serious issues of affordability and I expected the market to start cooling over the next few months.
However, for RBNZ to estimate a 22% increase in prices this year (it is alarming) and then with a 10% fall, it is a sign that the market is very, very volatile and their view confirms mine that it appears that the market really is seemingly really reaching a peak.
The trouble is, that while I have the greatest of respect for RBNZ outlooks, like any forecast despite their expertise, their data, and their models as well as their ability to influence the market they can be so wrong as was their view at the outset of Covid a year ago when they were forecasting a drop of 10% for the year ahead.
For me - only a interested casual observer - for the first time in the past decade I really are uncertain not only of the direction of the market but increasingly also the sustainability of current prices.
I have often posted that FHB need to keep in mind that the key is they are buying a house as a home; it is only the second and additional houses that are investments. The ability to ongoing servicing the mortgage continues to be their biggest risk - and that risk can be the result of a variety of factors both in the wider economy (e.g. interest rates) and also arguably the most common factors (health and sickness, employment security, relationship breakdowns etc).
No one forecaster - even the RBNZ - are going to get it right all the time, but I really think given the affordability and sustainability of current prices more so then in recent times there is currently need for caution among FHB (while remembering it is about a home).
As a note, reading Tony Alexander's comments today and his reference to surveys of REA and mortgage brokers the response has been that they have been still seeing good levels of interest from FHB but not investors who have been pulling back over the past three or four months. I don't feel that investor pull back is due to the introduction by banks of their self-imposed LVRs as many investors - including first time mum and dad property investors - will have seen exceptional increase in equity in existing properties over recent years so the 40% will not be an issue for most; rather I feel that they may be perceiving the market reaching a peak with some risk.

P8, I don't think you're right about the the RBNZ predicting a 22% rise and then a 10% fall. What they're predicting is house price inflation of 22 percent in the year to June, with inflation (not prices) falling to 10% in the year to December. Here's a pattern that closely matches that (rounded off a bit to make the numbers easier), that doesn't involve any house price falls:

House is worth 500k in June 2020. 550k in December 2020. 600k in June 2021. 605k in December 2021.

The price of the house has gone up 20% year on year to June 2021. The price of the house has gone up 10% year on year to December 2021. The price of the house never dropped, but what is lower is house price inflation.

Still really very scary.

Yes, scary for people who don't own yet. But I don't think scary for people who are about to buy - 'only' 10% house inflation is not bad for people who own. Though of course this is assuming the RBNZ predictions will be fairly accurate, which would be pretty silly to assume. The potential for extreme volatility is pretty scary, and I'm pretty angry that the Govt/RBNZ have put FHBs in the position where they have to choose between a rock and a hard place - don't buy now and there is a real possibility that house prices will have risen so much in 6 months that you will be locked out. Do buy now and there's an equally realistic chance that prices will crash due to all the messing about that's been happening and you'll be wiped out. If they'd done something about house prices a lot earlier, we wouldn't be in this position now.

We don’t know what to do. We have the ability to purchase a home (for our family - 2 kids) up to 800k. We currently live in TGA have been renting for 2.5 years since coming back from Sydney and don’t know what to do. Do we put every cent into a property on TGA (home) are have a HUGE mortgage in a average to poor houseor do we relocate to CHCH and get a decent home for 600k ish. It’s ****ing hard

Relocate to Brisbane would be my pick over Christchurch.

I feel for you mate, there are 10's of thousands of FHBs facing that anxiety which is frankly abhorrent

Thanks Albert, it’s certainly taking its toll. When we call agents they finish the call with “Good luck” and we never heard from them again. Our criteria is “3bedroom, dry, structurally okay home”. Our wants seem very minimal, IMO.

If you do go to ChCh, make sure you don't buy a pre-EQ home as a lot down there were't inspected properly, had cracks covered up, re-tiled, carpeted, etc.

Yeah we’ve spoken to a few agents and some were very honest about this. We would buy post quake for sure. Husband has just had 3rd job offers for Christchurch so it’s looking like a very alluring option. Cheap flights back home to see family and friends when/if we feel isolated.

Also means the kids would have a secure home, consistent school and not the instability of renting.

I feel like we need to make a move soon whatever we decide though, everywhere is going bonkers.

I could buy too but have not. Interest rates showing signs of (finally) rising.
I've decided to just see how things pan out. I'm happy to miss out - renting is OK for me and I think much lower risk at the moment.

Thanks P8

Yes, remember these are the people tasked with making our financial system LESS volatile, more stable and less prone to collapse. This is why I have been calling for their resignation, the removal of LVRs, addition of oodles of printed money via all sorts of mechanisms and incomprehensible lowering of the OCR has resulted in a fragile system that will be very prone to swings. Particularly if we get rising interest rates, which could result in such a downward dive, that if deep enough, it will trigger a financial collapse as has happened in other jurisdictions, which could in turn cause all sorts of economic calamity. They have acted WAY outside their mandate, actually in opposition to their mandate of financial stability. Heads should have rolled at the RBNZ already.

The caution you suggest is not yet being felt, but once it kicks in will be self feeding and potentially devastating if everyone starts doing it, due to our economies over exposure to housing.

Well said. Whenever Adrian Orr says it isn't his mandate to moderate house prices, he is failing in a core component of his mandate. It's not about keeping housing affordable, its about ensuring the stability of our financial system. House prices disconnecting from incomes is incredibly risky. Excessive lending, concentrated on a single asset class, with historically low interest rates is building a level of systemic risk that could easily turn into a disaster.

We are witnessing a speculative bubble, driven by concentration of lending to high risk categories (in terms of LVR/DTI). And to top it all off, all of our banks (considered to be systemically important) are all heavily exposed to this bubble.

I wonder how many of those FHB's that registered for Kiwibuild regret sitting on the sidelines for several months in the hope that Kiwibuild would be their first step onto the property ladder? And how much further behind the market they slid?

Big bold policy, vague policy, there are potential victims out there. It's very frustrating to watch.

Best for them to sit it out, or move to a country where they are building enough houses to keep pace with demand.

Really the best answer is once again shift to Australia. Most young people (and many not so young) in NZ have very little hope of ever owning a home here. Come back when you have got ahead and you want to retire or educate your children on the backs of the mugs who remain behind.

You do realise Australian house prices are higher than here for desirable area's, unless you're moving to Cairns or Adelaide or Perth? It may work if you're in the trades but if you're a corporate type Sydney will make your eyes water.

agree Sydney is crazy but there are plenty of other decent places that are affordable.

NZ is pretty nuts, for all except the prime Syd/Mel/Bris Australia is cheaper. If you have a trade behind you can live a pretty good life in a lot of Australia.

Yeah you could have a great life there if it wasn't full of Australians. In my experience and there has been more than one, they cannot wait to shaft Kiwi's so thanks but yeah nah.

Casual racism isnt cool.

Not sure about that Carlos. My brother is quite high up in the wheat export industry and living in Brisbane. He started with the wheat board out in the fields until they discovered he could read and write, and promptly moved him into administration. The rest, they say, is history...LOL

Yes, it is a well trodden path for NZ nurses, average wage NZ is 29.07 NZD, in Australia it's 42.42 NZD

So did Roberston issue his statement the day after Orr's statement because Orr did not lower the OCR etc.?

Timing can't be a coincidence?


This could have been done way before now or closer to the next OCR statement. Except now we aren't talking about Megan Woods' 12 houses.


Trying to remember is that 12 houses, more or less than were built under Kiwibuild?

Its so hard to compare the relative success of each policy. Go Labour!

Well, looking at the other announcements this is going to push out of the way - e.g. the reduction in child poverty that apparently hasn't had any effect outside the margin or error for Māori and Pacific Islander children. Now we can talk about houses again, not other failures!

Rather than a mater of timing, I feel that it is more about a disconnect between RBNZ and GR.

Lower rates seem to be having the opposite effect to stabilizing.

Of course they do. Efforts to 'stabilise' the market by slashing interest have only ever resulted in rocketing prices. The average market participant doesn't realise they are being bailed-out, they just see "Wow, how good are these rates - lets buy, buy, buy!!"

I'm sure plenty of investors are counting on the RBNZ and government to always be there and bail things out.


Any mention of targets, or an actual definition of affordability or sustainable house prices?

Funny timing

now has more to consider but then given no more tools to do it,

They've gone from a clear mandate to having responsibility inflation targeting / employment / house prices.
Maybe Orr could follow the Labour template and set up a 'working group' to advise him on what he is supposed to do....

Nothing could do more to aid 1st Home Buyers than adapting the US system of a State Owned Entity Bank which allows 1st Home buyers purchasing below the Median Price in a given market to gain a Bank Mortgage with a low deposit-5% being the norm. For NZ it could be 10%.
Far more achievable for Auckland's $110,000 annual income households than the present 20% Deposits. Bought our 1st home the same way in '78. Quite simple--you pay the Bank their normal interest rate, and then you pay the SOE an additional 1% of the Mort Bal until your equity grows to 20%. Last year the USA's SOE's paid the treasury hundreds of billions in excess premium profits. Loss rate over their 80 year history (outside the GFC) is next to nothing. And that was only because a misguided Congress forced upon the banks borrowing to people who should not have been borrowers. That was well corrected for by 2011.

You think the solution to run away house price inflation is to arm first home buyers with even cheaper money?

We have a supply problem (the government restricts house building). We have a demand problem (mostly property speculation -"investors").

Solve this on the supply side. The moment demand is being met, house prices will stagnate or fall and scare away the "investors".


Orr has come out today and is saying that he is trying to drive interest rates on loans even lower.
Maybe Orr and Robertson could settle this in the ring?


A sumo wrestle? Seriously this whole ruse seems like an extension of the letter-writing charade

I agree, plenty of finger pointing but no real responsibility taken within government.


These characters will go down in the annals of New Zealand history , like the Hurleys and Cowens of Irish folklore.


This policy is going to be used as a further weapon against first home buyers.

Now that these muppets have succeeded in getting prices to levels so far beyond the reach of the average kiwi they will now use this policy as an excuse to prevent them coming back to earth... in the name of "sustainability".

The fat controller has just locked todays insane prices in, forever... The RBNZ will now be officially mandated to fight deflation in house prices.

You couldn't make this shit up.

This inept and incompetent government will now been seen to have done something by simple minded folk. It's all about the optics.

And princess tooth tooth the champion of globalism is just chomping at the bit to flood the country with more multicultural immigration just as soon as she can.

The RBNZ was doing that already in the name of financial stability. NZ banks are not diversified at all.


Perhaps the RBNZ needs to look at its regulatory settings that incentivise the banks to lend so much money on houses as opposed to businesses?

Seems like it's practically impossible in NZ for someone to go to a bank with a 'business plan' and then walk away with a 6 figure business loan. Banks just want a house as security.

RBNZ also set the bank regulations allowing lower collateral for house loans. They should correct that first. That would further stabilise the banks and would tighten loans significantly to drive house prices down.

'They' (Reserve Bank and Government) are pulling levers to lower prices while at the same time pullling other levers to raise prices.
I would bet my last dollar that the amounts of the deposit grants to FHB's will be increased by the government, as it is a political catastrophe for Cindy if they are locked out completely.
It's all so utterly stuffed up.

Hi Brock. That's not the way I read it (the part about being officially mandated to fight deflation). It looks like they are being mandated to dampen investor demand in houses, i.e. this is a one-way mandate to fight price rises but not necessarily to fight price decreases.

Yep the vaccines are really starting to roll out now with the Johnson & Johnson one hitting the market. If they can get ahead of any bad mutations we can expect totally open boarders in about 2 years from now. The floodgates will open and then it will be off to the races again with house prices.

It's amazing that you enjoy berating immigrants but are ever so eager to be one yourself! (I'm referring to your previous post on your new job acceptance overseas and hope that the borders reopens soon so that you could leave immediately).

The place you're going is more multicultural than where you are now and on the day when you land at the airport remember, you are officially an economic migrant and a refugee.

Nothing is more humbling than being the devil that you had tried to exorcised your entire life.

Berating high immigration is not the same thing as berating immigrants.

Cool story bro.

Except I hold Australian citizenship

Try harder next time.


As usual, policies after the horse has bolted.
If they were genuine, it would have been done 6 month's ago

Right on!

She's still there as far as I know. Will only step down when it is obvious that a crash in the housing market is emminent, or if it is apparent FHB's can no longer get on the ladder.


Under pressure :

: Now Mr Robertson, will ask for opinion or set up a commitee with a time frame of few months

: Than after reciving advice will take couple of months to decide on the advise.

: Than after making a decession on advise will send it to RBNZ to impliment after few months.


Good ideas but is Mr Robertson not playing with time as just yesterday RBNZ came out with monetary policy, so should Robertson not acted before but why just now ( though welcomed) - now just after a day of RBNZ announcement - Politics as forced to act but as has no intent playing with time for now.

If Jacinda Arden and her team really wants to act, should finish of the exercise by March end so can impliment from 1st April 2021 as are doing to do control ponzi and if yes, should act fast as ponzi rising on a weekly basis.


This is so much fluff, not an ounce of real action, pass the buck time again. The RBNZ do not have the tools to make this happen. LVR and DTI are normal measures used by banks to assess their risks but they can create as much credit as they wish within their Basel 111 constraints. If the RBNZ’s only tools are QE and OCR then we savers are stuffed and it is no help to FHB. The Govt have yet again shown they do not have any clues as to what to do.

"savers are stuffed and it is no help to FHB." (or any buyer, actually)"

Savers end up with less disposable income to apply in the economy and borrowers just plough whatever savings + debt ( % cost is immaterial) they have back into the property market.
It's not a zero-sum game that sees 'savers lose, borrowers win!'
The country ends up with more Gross Debt and Offsets that with Higher Property Prices. And that, too, isn't a zero-sum game - it's deeply negative for society and the economy.

People borrow -> M1 goes up -> House Prices go up -> Equity Goes up -> enabling people to......Borrow -> M1 goes up -> House prices go up -> Equity Goes up.

Rinse and repeat.


Robertson is under political heat & can sense the '9 long years' duck-shove is wearing thin, so has decided to get the hospital pass through to Orr now.


Hey Grant if you are reading I have posted a link to explain what a distortion interest only loans create...

Don’t forget 45% of investor loans last month were interest only....

pretty hard for FHBers to compete with people willing to purchase property with no intention of paying off the loan...and make a loss

I got my monthly ray white real estate market update this week, apparently 12% of their sales are an investor paying in cash so no lending at all.

As can be seen by falling TD rates.

Surely interest only investment property (or worse, negative geared) should be treated as a signal of intent of capital gains, thus tax applies. Beyond the current bright line. Time to cut down the freeloading a bit.

Yes, it could be, but not necessarily. It's just another financing type, eg might be used for a short period of time if cash from yield for principal payments is tight but the intention is to pay P&I after a few years.

The trouble with not dealing with the root of the problem is that everything else is a reaction, which for every symptom it is meant to solve creates at least one more.

If you follow the trend then it will end up with only those with real cash in the bag need apply.

Here's a simply idea, rather than curbing everything under the sun to regulate house prices/free markets/tenancies/CGT/DTI/LVR's...blah blah blah..........Simply try to do what is required and build more damn houses to meet demand, can't keep circulating the same amount of housing and trying to over regulate, when stock is nowhere near the required amount and has not been near the required amount for decades!
House prices and ownership will remain out of whack until this is done!


There is enough housing stock. The policy settings are just so in favour of investors it's just a piss-take. Go to any open home/auction and see what's happening - the narrative that we have a housing shortage is false.

loveryourwork - loveyourcomment.

Not sure how you came up with the result that there is enough housing stock?

“Increasing supply isn’t just about building new homes, it’s about managing the stock that we already have that’s not being used."

The Irish stock they are talking about is mainly abandoned derelict stock. Not vacant houses like we talk about in NZ.

Agree! The party line about insufficient housing stock is such a load of crock. Yes we have homeless people, but not in droves that would indicate insufficient roofs.
There probably is however a land availability issue for people who would like a new build (at least in different TA's depending on the slant of the strategic planners for that locality, which varies, I think inappropriately, from region to region). Here's hoping the RMA reform goes some way to tackling that issue.

Repealing zoning laws and the RMA for a few years will allow renters to build and gut investors. The investment game is all based on holding affordable housing supply hostage.

That's a relatively long game, lacking anywhere near the urgency of the current housing situation for first home buyers and renters.
Yes I agree we need land management reform, but we also need to put in place strong policy to try to rescue what is very broken now.

It'll never happen though, neither major party in New Zealand wants to penalise ownership of houses. Our only chance is to out-build demand.

The old developer saying, 'unless the land is right then everything else is wrong, ' is so true.

Sort out the affordable land supply problem and by default, you will solve almost all the other issues.

There would be no stronger policy statement that you could make. And I'm not talking about replacing the RMA with three new acts.

They've tried that, culminating in Megan Woods 12 houses


Consider how much effort it took her to achieve so little. She might injure herself if she actually does her job.

.. someone needs to roll Violet Beuregarde to the juicing room

Yes more construction is needed, but the the financial exploitation of kiwis renting has to be stopped as well.


DTi limits should do it and putting a bullet in interest only, and lets not forget that Orr asked for Dti to be added to the tool kit in 2020. Allow FHB'ers to have a higher multiplier than investors. The announcement in March should be very interesting. Imagine specuvestors being requiring to more equity v.s. debt for the first time in a generation. If Labour brings in DTi limits, it will have delivered in a decisive victory in the battle of reducing inequality in NZ, and delivered it in style.

I wonder what the Auction clearance rate next week will be...


Where is the confusion. Mr Orr asked for DTI and Mr Robertson declined saying thard to differntiate among FHB and investor/speculator...really......has it not be applied for LVR.

Now also is playing with time. Simple Mr Orr asked for it so now Mr Robertson should not only give it but ask them to impliment land if Mr Robertson is playing politics than Mr Orr can give them rhe feedback the very next day as am sure they when requested had prepared the proposal and than see what Mr Robrrtskn does as ball will be in his court.

For interest only loan, simple guve a deadkine that from now on no new inteest only loan will be allowed ( not give time/ window of oppirtunity) and pase out existing interest only loan in next month or three.

Was watching the serial YES MINISTER the other days and this what FM under PM is doing a classuque case of delaying - playing with the time as nit serious but being forced so should look like taking action.

Exactly. The idea its not possible to set different DTI limits for investors vs owner occupiers is utter bullshit. They already differentiate LVR limits for Investors/Owner occupiers, so they already have the mandate and ability to implement these sorts of targeted initiatives.

Tick, tick, tick, tick - while GR is looking at DTIs and trying to work out what affect interest only loans have, he will be hoping that another distraction comes along. Let's see - set up a working group and then a committee to review reports - meanwhile tick, tick, tick, tick .....


My man, the Central Bank is still trying to figure out if printing money pushes house prices up. Not stopping them from doing it though, is it?

This comes a day after Orr's announcement - too little and FAR too late.


Shocking passing of the buck. The issue here is that multiple Govt and RBNZ policies (accommodation supplement, LSAP, OCR, taxation, etc) are all set to create the perfect conditions for a housing boom. It needs a major Govt intervention - e.g. a moratorium on purchase using leveraging, 3-year rent freeze to allow time for more considered policy instruments and building some actual affordable rentals etc. There is no 'kind to everyone' way out of this.

Hugely overdue. However, It should only be the very first step. The RBNZ and the Government must take bold, concerted and immediate action to pay attention to the real productive economy, to young Kiwi workers and the new generations, and reduce the scourge of unproductive housing specuvestors.
Interventions in many areas (such as taxation, monetary policy, banking policies etc.) will be required. NZ current economic unbalances created by this over-inflated housing Ponzi must be rectified, and sooner rather than later, before it's too late and before this housing Ponzi takes down the whole of the NZ financial system with it, once the bubble bursts.

This feels a little like GR is just passing the buck. Keep in mind it was GR and Labour that mandated the RBNZ factor maximum sustainable employment when setting monetary policy, which actually put additional pressure on them to keep interest rates artificially low to keep the economy "humming" ... but resulted in further inflating the bubble.

So now the RBNZ have to ensure house prices don't rise, employment stays high, and inflation is kept in check? Really?

How about the government use the wide range of tools available to them to get this under control, rather than rely on RBNZ use a single blunt tool to attempt to fix every problem under the sun. Here is a list of things the government could address:
- Ensure we do not return to high immigration inflows
- Ban the use of interest only lending on housing
- Provide DTI tools to RBNZ
- Ensure speculative investment in housing is appropriately taxed
- Land Tax to target landbankers
- Use Eminent domain to acquire land for housing projects.

I personally think RBNZ are already doing a horrible job of managing the financial stability by allowing massive volatility in house/asset prices. So i don't absolve them of blame, but I'm not sure Labours proposal here is actually of much use.

it is too little too late. The commodity and inflation cycles have turned. Look at the 10 year rate in US, then look at copper and iron ore and petrol prices whilst gold reversing rapidly. Professionals looking at inflation coming.
massive gov and RB printing worldwide and China just announced another $5 trillion! infrastructure spend. In addition have a look at the 40 year bond run in USA, about to hit critical up point after 40 year decline. Cycle from deflation to inflation bias took about 9 months to reverse but not its unstoppable. Vaccine bets adding to fire.

Lots of cynical comments, but I think this a good thing.

Yes, because those comments show that some of us aren't drinking the Kool-Aid.

Good think in IMPLIMENTED in timely manner

The short version of all of this is that house prices in New Zealand are high because of RBNZ interference overriding market forces. The market should be determining interest rates not an institution trying to cover up for the central government failures in planning the economy.

I do not think there is any issue in planning the direction of the economy as it can be productive. The problem is having the economy revolve around housing is the problem. See Princes of the Yen to get an idea of how this could be managed in a competent manner.


This is getting ridiculous, total abdication of responsibility by elected officials. There is no way the RBNZ can deliver on that collective mandate - we have raging house price inflation but still well below full employment and inflation is benign. It's time to tax investor capital gains - I would have to pay and I still think it's the right move.

Great but how exactly do you tax an unrealised capital gain. All the investors I know never sell.

A slight variation, but weekly land value tax. Or yearly, but a big bill is less palatable than regular outflow. We used to have an LVT, and it's a far more efficient tax than a CGT.

Quarterly land tax


It's even easier than that.....
Stop Investors re-entering the market with other peoples' debt. (Ok. So it's bank debt - same thing. We stand behind any problems brought on by 'Instability")
If you want to buy another investment property - fill your boots! But do it with your own cash - not mythical revaluation profit from the current holdings.

Failing that....
Anyone who uses leverage from an existing portfolio will have been deemed to have 'sold' one or more of them to themselves to realise the needed equity and must pay Income Tax on those implied sales. (ie: Purchase price versus 'value' used in the collateral valuation. Bought 1973 for $30k and want to keep it, and used it in 2021 as collateral for $1 million loan? Pay Income tax on $970,000; adjust it for CPI Inflation if you like (now there would be the chickens coming home to roost!)
Want to use leverage and keep your portfolio? Income Tax those properties used as collateral.

It's certainly a diverse range of considerations that the RBNZ will need to turn their mind to, and how do they reconcile those often conflicting considerations?
But it's not impossible. As Miguel states further up, they could cut the OCR *at the same time as* applying DTIs to investors.
Reconciliation of the objectives might be challenging but it's not impossible.

They'll have to make some trade-offs. As I see it they've got a lot of latitude to decide how they make those trade-offs. All they need to do is explain how they did it after the fact.

Cpi.. full employment and now house prices.
Wow.... Good luck with that.
Governor Orr dwill end up gender fluid with confusion....
Wont know what to do..... Or.... Will do what he pleases and justify with any of those 3 mandates as the excuse.

Agree. Surely RB Govenor needs to know what the priority is if the measures end up with conflicting results, and I can't see how this won't create conflict.

It's his job to evaluate all of these items to consider and he should have a capability to do this. He isn't on minimum wage so he is expected to have the capability to make these decisions. If the Governor feels at any time that he is not able to do his job then he should resign.


Yeah, I told an employee he had 1 hour to dig a trench 3 foot deep and 12 foot long but he could not disturb the dirt. Came back and he hadn't started digging as he said it was "too confusing". I fired him then and there. Take note Orr.



Robertson added the full employment mandate a couple of years ago, making the RBNZ ease more, then after being unhappy with the results, wants to add another mandate to put upward pressure on interest rates.

Ship of fools.

We should be asking why the free market isn't allowed to operate given that our centrally planned economy is not functioning.

In all fairness, I doubt that would have made the OCR any different given the circumstances.

Lol - the old "Pass the buck" strategy... make it the RBNZ's problem instead of making any policy changes in government

The RBNZ is mainly responsible for providing financial stability, while the treasury and governments job is to set policy and create laws that support that... Not the other way around!

If Government has intent can do it easily but the Question is do they ?

They are only making noise as are been forced by the situation and cannot be seen as not even thinking about it - cannot ignore so trying to potray that they are concerned - Now even Jacinda Arden is not what she was when she became PM - now one is looking at sharp manipulator, as politicans are.

Check her body language when she speaks on this issue when confontred.

What we need is DTIs on investors, no leveraging off existing equity for investors, and an immediate end to interest only mortgages. However, at the same time (for selfish reasons), I'm a bit nervous as we just put what I previously would have considered an insane offer on a property (upsizing in preparation for kids). We are owner occupiers moving so need to sell our existing house if our offer is successful, and that hinges on getting a similarly crazy price for our current place (we bought in Wellington a couple of years ago as FHBs for 700 and our valuation is now 1 mil god knows how)... Will be interesting to see what impact this has.

So Independence is no longer written in wonders how the markets and banks will view this latest move.

If you want anything better than a "consideration" add house prices to the measure of inflation

In the UK they do consider housing. CPI-H.

They may well...i doubt they change terms of remit mid stream however....the idea of central bank independence is to avoid political interference, it is that which appeals to markets and banks.....this is an anathema to that I suspect

Everything, everything! to avoid opening up land and building more houses.

Hear, hear. Repeal zoning and the RMA for several years, we have to normalise the market immediately. There is no realistic alternative.

Still got to have someone pay for all the infrastructure to service the newly opened up land.

I like the idea but what are RBNZ supposed to do in reality? They don't have the authority to repeal zoning laws or the RMA.

New Zealand should be in a rip snorting house building boom but government have held developers back.

So we can have a whole lot of empty (but older stock) houses? Seems wasteful...
When the answer should just be putting some decent measures in place to slow down the unchecked madness that is property investment in this country.

Realistically though that will never happen because housing is a sacred cow, we have to build our way out.

It's not hard to get Investors out of Single Family Houses and into Commercial type housing--multiple unit buildings. They do it in the States by 1) No tax taken on all the contributions into "Kiwi Saver' like retirement schemes-$15,000 contribution, and the entire Gross amount goes in. 2) Capital Gains on sale of Investment Property--no bright line-goes on forever. 3) Investors pay Commercial Rates, not "Homestead Rates" which you pay on the house you live in. 4) Tenants received a Tax Credit from local State to compensate for higher Rates paid by Landlord--thus tenant gets the benefit, but not the landlord. Bottom Line: There is no City with Mum & Pop Investors gobbling up all the bottom quartile houses for Rentals. 5) 1st Home buyers and anyone buying under the Median in a given city can buy with 5% Deposits--except Investors.

11 November 2020
This is out of control, Robertson and Treasury and RBNZ have got themselves into a tangled mess that is beyond their control. Nothing they can do about it. Anything they do from here on in will make matters worse

They were warned

And, so it has come to pass

I have today had my loan application declined by ASB. Total net equity after loans 5 times the new loan and income a little more than average! My comment to the mortgage broker was should we be looking for something cheaper or should we put the rents up?


Did you consider Option (3) Quick, sell, before others get given the same sad news that they might have trouble borrowing to buy my existing rental portfolio?
Probably not. Property always goes up, after all.

What did you use to determine the value of your properties e.g. CV or RV?

17% LVR is safe as houses so either your values are BS or your DTI is abysmal.

Take your medicine.

You should be selling.

In the two weeks prior to Robertson's infamous letter to the RBNZ, both Ardern and Robertson repeatedly pointed the "bone" at Orr, laying the blame and accusing Orr of being responsible for insane escalation in house prices, and thus it was his responsibility to fix them. That resulted in RBNZ terse response back to Robertson that fiscal measures were required.

It's a stand-off

Ardern and Robertson are determined to make the Orr the fall-guy.

Frankly, I'm surprised Orr hasn't fronted Roberston and offered to hand back his keys to the company car for a 5 year severance package

Weird cos while Badjelly pointed the bone at Beetroot wasn't she at the same time insisting RBNZ is independent and she can't meddle?

This government surely must have a housing policy, to have concerns about housing?

"The Government’s policy is to support more sustainable house prices, including by dampening investor demand for existing housing stock, which would improve affordability for first-home buyers."

Dampening investor demand could be achieved pretty quickly by imposing stamp duty on investor purchases, introducing a comprehensive capital gains tax on investment residential property or many other direct govt actions. Why push it on to RBNZs lap ?

'Cause they painted themselves into a corner by promising no tax changes at all for this term of government, aside from the income tax change.

Also they need to try and get elected again in 2023, whereas Orr doesn't face that barrier. Policy that can truly effectively halt house price rises are likely to be broadly unpopular with the electorate.

"Also they need to try and get elected again in 2023."

Therein lies the problem. Getting re-elected is more important than effective policy

They don't really want to fix it. The housing ponzi does the heavy lifting to keep the debt mountain intact

“I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” - Abraham Maslow, Toward a Psychology of Being.

Looks like Grunty ran out of ideas to pacify the mob and is passing the buck to RBNZ; knowing very well a blunt tool can't cut fine.

What he didn't realise is that he's just setting RBNZ for future failure and this won't end well for the NZ economy in a major way.

A blockbuster movie coming up this season on your TV screen, stay tuned.

This is window dressing on behalf of Robertson. His government is, and its predecessors, had all the tools bar two to keep house prices under control. They repeatedly refused to do anything other than blame the RB (plus some meek restrictions on foreign buyers and bright lines tests that are anything but bright). It's the failure of the government and it's royally frustrating to anyone with a grasp of economics to have to listen to / read all this drivel over the years.


Maybe the Wiggles were allowed in early so they could rehearse Hot Potato with Grant Robertson??


Really is this a surprise to anyone ? Hey wait a minute are we still not waiting for that review into petrol prices by Labour ? Thats right just give it a few months and everyone's forgotten about it. Maybe this ones not going to go away however.

First home buyer will love to see house price is falling faster. If they buy a house now for 800k, they are happy to see it is falling like 700k, 600K.......Later on their house only worth 5 times average income 250K.Inequality problem solved .

Michael Every of Rabobank has written an article on the RBNZ's ideas of "sustainability.