New Zealand’s Reserve Bank deputy governor, Grant Spencer, has stated that regulatory moves to restrict bank lending to residential property investors are “a live possibility” and that while this may not solve the problems it creates entirely, “it would potentially moderate it”.
The intention is to increase the amount of capital banks must hold against the portion of their loan portfolio that is given over to property.
In a speech to the Chamber of Commerce in Rotorua last week, Spencer said the Auckland market was particularly stretched, with house price inflation now at 17% per year and median price-to-income multiples over seven. He warned that “the increasing degree of stretch in prices means that an eventual market correction is increasingly likely to be disruptive to financial stability and the economy.”
Spencer also said that “the Reserve Bank would like to see fresh consideration of possible policy measures to address the tax-preferred status of housing, especially investor related housing.”