RMA reforms are next as the government plans to crack down on real estate speculators

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The government will today announce the next steps in reshaping the Resource Management Act, an important part of its long-term plan to halt house price inflation growth by freeing land for development.

Environment Secretary David Parker is expected today to outline the government’s first RMA decision and set out the legislative program to split the cumbersome legislation into two separate laws, a Labor election pledge.

The lack of available land to build houses is widely considered to be a major driver of land prices, and therefore property prices as well.

Labor used the first parliamentary session of the year on Tuesday to reinforce their rhetoric about housing, but it was the Reserve Bank across the street that took the first step to try to stop the rise in house prices.

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While Treasury Secretary Grant Robertson confirmed over breakfast that the government would finally deliver the first tranche of its housing package in February, the Reserve Bank of New Zealand announced over morning tea that it would reintroduce the mortgage lending ratio.

Lending restrictions, which cap the size of low-deposit mortgage loan banks, will be tightened this year to restrict the flow of money to property investors, the Reserve Bank said

Grant Robertson says the government will announce a series of measures to deal with the housing crisis, beginning with demand control measures in late February.

ROBERT KITCHIN / stuff

Grant Robertson says the government will announce an ongoing series of measures to address the housing crisis, beginning with demand control measures in late February.

The restrictions were initially lifted in April 2020 to stimulate the economy during Covid, but have now been reintroduced to flatten the foaming housing market – albeit in the name of financial stability.

“We are now concerned about the risk that a sharp correction in the housing market poses to financial stability. There is evidence of a speculative dynamic where many buyers are heavily in debt, ”said Geoff Bascand, Reserve Bank Deputy Governor and General Manager of Financial Stability.

However, it is the government’s much-anticipated response to the housing crisis that it previously said will include both supply and demand drivers of house price inflation. Grant Robertson said yesterday that his focus is on real estate speculators.

“New Zealand is currently in crisis when it comes to the housing situation,” said Robertson in a BNZ breakfast presentation in Wellington, in which he named housing construction as the focus for the 2021 budget in May.

“New Zealanders see family members of speculators and investors being discouraged from buying their own home,” he said. “We want to align the balance more closely with first-time buyers and at the same time create incentives for more investment in residential construction.”

ROBERT KITCHIN / stuff

“Nobody wants to live in a country where you can only move into a home if your parents help you,” says Prime Minister Jacinda Ardern.

Later in the day, Jacinda Ardern also said the government would try to “tip the pitch towards the first home buyers”.

“Nobody wants to live in a country where you can only move into your own home if your parents help you,” she said.

After the government came to power in 2017, in part with promises to create more affordable housing, and KiwiBuild, the government instead spearheaded ongoing house price inflation, boosted by Covid-19, causing supply to fall as the People settled and even more money chased even fewer houses.

House prices have risen since the pandemic, with the nationwide median house prices rising 19 percent year over year in December, contradicting economists’ forecasts of a decline of between 5 and 10 percent.

“We saw the impact of rising demand for real estate from speculators and investors overturn those predictions of falling prices by mid-year,” said Robertson. “This is clearly about taking the heat out of the housing market. What we will eventually see is a moderation in house prices. “

Robertson said the government will announce a series of measures to deal with the housing crisis, beginning with demand control measures in late February.

“We all know that building more homes, especially affordable homes, is critical,” he said. “But we can also do more to control demand, especially from those who speculate.”

The government has been advised by the Treasury Department and the Reserve Bank on measures to manage demand and prevent speculation, and proposals will be presented to cabinet shortly, he said. The advice includes new ideas and actions already included in the toolkit, he said.

Plans to improve housing supplies will be announced after the 2021 budget is completed, he said. A “significant amount” of the additional $ 7 billion earmarked for infrastructure investments through 2033-34 would go to housing.

Robertson did not provide any further details about the plans, but said it was time for “bold action.”

“The market has moved fast and fast in ways that are not sustainable. We have some tough choices to make, and we will. “

The economy recovered from the lockdown last year faster than expected. A report last week showed that the unemployment rate unexpectedly fell to 4.9 percent in the December quarter, from 5.3 percent in the September quarter, as a booming construction sector offsets weakness in areas such as tourism, affected by the border closure.

“Our economy has recovered much better than expected and we are in a strong position to deal with what is to come,” said Robertson.

Updated forecasts from the Treasury Department show that net debt would be 36.5 percent of GDP in 2034-35, $ ​​60 billion less than previously forecast in September last year, he said.

Robertson said he will focus on directing spending to the areas and people who need it most, balancing public service investments with debt containment.

“With the economy recovering more than expected, we are taking the opportunity to assess whether money can be better targeted or re-prioritized where it has not been used,” he said.

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