Here’s another mad-cap idea dreamed up by someone interviewing their lap top.
Any move like this will kill the building industry stone dead resulting in job losses and bankruptcies throughout the industry. Who is going to build into a market where heavy restrictions prevent buyers from purchasing new ( let alone existing) homes?
It will also decimate the rental market as frustrated home owners will be forced to rent even longer – if not for ever – inevitably resulting in sky high rents.
It will also make matters worse for the suppliers of rental properties – the much maligned investor – who will also be largely locked out of the market. Natural attrition will ensure that the number of rentals will taper off rapidly putting yet more pressure on rents leaving those seeking accommodation to struggle in an ever decreasing sea of shortages.
We have seen enough damage done by the ineffective LVR regulations. Do we really want yet more damaging storms?
Capping mortgages an option
The Reserve Bank has not ruled out capping mortgages based on incomes, a move its British counterpart is considering to cool Britain’s property market.
If New Zealand went ahead with the policy it would put pressure on house prices, particularly in Auckland where buyers could be forced to lower their sights by more than $100,000.
Bank of England governor Mark Carney recently suggested imposing an “affordability test” on borrowers and stopping home buyers from taking mortgages more than 4.5 times their salaries.
His comments came amid concern about rising property prices in the Britain, particularly in the London area, but affordability is even worse in New Zealand according to the annual Demographia survey.