26 Sep 2016

Call to free first-home buyers from LVR restrictions

9:51 am on 26 September 2016

First-home buyers are being locked out of the housing market by the Reserve Bank's lending restrictions and should be exempt, says the Property Institute.

Sold sign outside a new house being built in East Auckland

Photo: RNZ / Claire Eastham-Farrelly

Statistics show that nearly 80 percent of renters - or about 438,000 people - did not have enough money squirrelled away to afford the 20 percent deposit they need to buy the average home.

Property Institute chief executive Ashley Church told Morning Report the restrictions were not needed.

"The experiment that was entered into by the Reserve Bank a little less than two years ago, of applying LVRs to first home buyers, not only hasn't worked, but was done on some pretty spurious grounds, and it's now constituting a very large fiscal experiment that could be expensive for a large part of the New Zealand population."

Mr Church said first-home buyers should be exempt from the restrictions, and it should be up to the lender to decide what deposit was required to buy a house.

He said it was very unlikely that there would be a correction in the New Zealand property market without direct action.

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