The Auckland Chamber of Commerce chief has gone into bat for the rest of the country over the Reserve Bank's lending limits, saying that the whole of New Zealand shouldn't be penalised for Auckland's problems.
Chief executive Michael Barnett said there were signs that first home buyers outside Auckland were becoming "unwitting sufferers" of the RBNZ's policy.
"The Auckland housing market has been overheated for some time, and this should be the target market for the Reserve Bank’s loan to value ratio (LVR) policy," he said.
Barnett said while he appreciated the intention of the policy was to cool the house price market, he questioned its fairness and whether it would make a real difference.
"First, the big housing problems are in Auckland, not across the rest of New Zealand. This is reinforced in the NZIER’s recent release showing Auckland’s real house prices are up 15% on 2007 while for the rest of NZ they are down by 25%.
"Second, by pricing first home buyers out of the market, there are real risks that developers may focus on higher end products; especially in Auckland where there is a continuing demand for higher priced housing."
Barnett acknowledge that it was early days for the new policy, but said the Auckland Chamber’s initial impression suggested that property developers were being incentivised to continue focusing on the the "top end" of the housing market.
"Therefore long-term the Reserve Bank could end up penalising the need to increase first home buyer housing stock.
"Despite the relative real house drop outside Auckland, first home buyers face a tough challenge to meet the 20% LVR policy.
"With Auckland 35% of the New Zealand economy and the dominant player, it is time that policy designers and decision-makers in Wellington took a more innovative and realistic stance in their approach to addressing issues. Auckland is different to the rest of New Zealand and this should be acknowledged and recognised," Barnett said.
"It is unfair to keep penalising the rest of New Zealand for Auckland problems."
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