Lending policy may create 'renters for life'
One of New Zealand's largest home builders says the Reserve Bank's new lending restrictions are killing new home-owners' dreams and setting up a generation of renters for life.
Under the stricter rules, which came into force on 1 October this year, no more than 10% of a bank's mortgage lending can be to people with home deposits of less than 20%.
GJ Gardner homes says it has lost 24 new-home build contracts since.
Managing director Grant Porteous says many of those who ended their contracts were at the 16% to 17% threshold.
However, he says they either couldn't meet the new requirements, or were scared off by what the policy would do to house values.
Mr Porteous says the policy is having the worst impact on the very New Zealanders needing to get into their own houses and it could be setting up a generation who are renters for the rest of their life.
Another company, Jennian Homes, says it has also has noticed a decline since the Reserve Bank policy was introduced.
Its business development manager, Dave Wilson, wants new house construction to be exempt from those rules. He says the restrictions on new homeowners means new houses aren't built, so the shortage increases again.
"It's a simple supply and demand equation, which means that there'll be fewer houses, therefore, greater demand, so therefore prices rise again."
The organisation representing the industry, the Registered Master Builders Federation, says its figures show as many as 3000 contracts could be affected this year.
It says it hopes to meet with the Reserve Bank soon to discuss the possibility of exempting new house construction from the new rules.
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