Property Institute of New Zealand chief executive, Ashley Church, is calling upon Finance minister Stephen Joyce to renegotiate the government’s target agreements with the Reserve Bank in light of this week’s announcement that current governor, Graeme Wheeler, will not be seeking a second term.
Mr Wheeler will step down at the end of his current term on September 26 and will be replaced by deputy Reserve Bank governor Grant Spencer who will be appointed acting Governor of the Bank for six months from that date.
Mr Church, who has been a strong critic of Reserve Bank policy over the past two years, says that the resignation has provided the government with a timely opportunity to review that policy and its effect on the housing market. He says that many of the bank’s decisions have actually damaged the market and have substantially slowed down the rate at which the construction of new homes might otherwise have caught up with demand.
“While the government, the Auckland Council and the private sector have all been focused on addressing the supply issue in Auckland – the Reserve Bank has been unashamedly at odds with the market in its attempt to artificially cool demand. Sadly, it’s failed, and has only served to make the problems in Auckland even worse”.
Mr Church said that he would like to see the government adding a ‘Housing Market Supply’ clause to its contract with the Reserve Bank which would require the Bank to consider the effect its policies would have on overall supply.
“If such a policy had been in place two years ago the disastrous LVR restrictions would have been much more carefully considered – and there would be no talk of debt-to-income limits on lending”.
Mr Church says he would also like to see the government move to immediately modify existing Reserve Bank policy – particularly the LVR restrictions on first home buyers.
“The decision to put LVR restrictions on first home buyers has been directly responsible for stopping thousands of kiwis from buying a first home – and the longer they stay in place the worse the situation gets. We don’t have the luxury of waiting till September till those restrictions go – they need to be removed right now”.