Govt inaction makes Reserve Bank the bad guy

National’s inaction on the housing affordability crisis is painting the Reserve Bank into a corner, says Labour’s Housing spokesperson Phil Twyford.

National’s political positioning on housing is forcing the Reserve Bank into an over reliance on loan-to-value-ratios which, unless coupled with other settings to combat house price inflation, will hurt first home buyers.

“Reserve Bank Governor, Graeme Wheeler, has indicated the bank is moving closer to using macro-prudential tools which could force the sector to require home buyers put up a bigger deposit.

“Controls on high loan-to-value ratio (LVR) lending, with deposits of less than 20 per cent, are among a suite of macro-prudential tools being considered by the bank to quieten the Auckland housing market.

“National’s own economic settings are causing house price inflation. Government inaction has forced the Reserve Bank into an overreliance on LVRs and its refusal to tackle rising house prices is leaving the Reserve Bank to play the bad guy.

“Labour supports the Reserve Bank having access to a range of other tools, including LVRs. Tools that would limit bank lending so that the Reserve Bank has options other than raising interest rates.

“The absence of a more serious policy assault on the housing crisis threatens to make things tough for first home owners. That is perverse.

“John Key is uncomfortable talking about the housing affordability crisis because he knows his government can’t guarantee affordable homes,” Phil Twyford said.

“A Capital Gains Tax excluding the family home would reduce the cost of housing and take some of the speculative heat out of the market.

“Labour is the only party that is not afraid to make the tough calls to support first-home buyers into affordable homes. Instead of blaming councils and tinkering with planning laws, the Government should roll up its sleeves, work with the Reserve Bank and actually build affordable homes.”

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