A focus on increasing housing supply recommended
The Organisation for Economic Co-operation and Development (OECD) has recommended that the New Zealand government change the approach both it and its predecessors have taken to housing policy.
In a new report, the Paris-based organisation said the government should scrap policies aimed at helping people buy their first home, and instead focus on policies aimed at increasing the supply of houses, including public houses and purpose-built rentals.
The OECD suggested the government stop allowing people to withdraw funds from their KiwiSaver account for their first home, junk First Home Loans and First Home Grants that allow low-income earners to buy low-cost homes, and reprioritise, provide more funding for KiwiBuild, which sees the government underwriting low-cost new building for eligible first-home buyers, interest.co.nz reported.
In light of the effect the Reserve Bank’s macroprudential policy has on its first-home buyers, the organisation urged RBA to complement its LVR restrictions imposed on banks’ mortgage lending with debt-to-income restrictions or to introduce minimum interest rates, which banks can use when assessing borrowers’ abilities to service debt.
Just last year, the Reserve Bank was given the power to impose such restrictions on the condition it would “have regard to avoiding negative impacts, as much as possible, on first-home buyers, to the extent consistent with the bank’s purposes and functions,” the report said.
The Reserve Bank’s consultation on the possible introduction of debt serviceability restrictions closes on Feb. 28. Meanwhile, the government has expressed no intention of changing the policy on KiwiSaver withdrawals, interest.co.nz reported.
