Scrap loan restrictions on new home buyers and raise them steeply for investors. These are just two suggestions in a four step plan being put forward by the organisation that represents property valuers as a way to solve the Auckland housing crisis.
The latest statistics from QV show the average property price in Auckland for August topped the million dollar mark, at $1,013,632.
Property Institute of New Zealand chief executive Ashley Church says there will be no crash in Auckland and the market needs to be reined in.
Mr Church says the key is upping the supply of new homes and the Institute has come up with a four-point plan to solve Auckland's problems.
Step 1:
1. Remove Loan to Value Ratio restrictions (LVRs) on first home buyers. Let these people buy any property they choose provided they can repay the mortgage.
2. Remove LVRs on anyone (including property investors) buying or building a new dwelling. The Reserve Bank has just announced this - as long as the new house is only six months old.
3. Increase LVRs for property investors buying an existing dwelling up to 60 or 70 percent. This is designed to push investors to put their money into increasing the new housing supply.
4. Discourage land banking by significantly increasing rates on vacant subdivided/separately titled sections. Mr Church says landowners paying more to sit on land would discourage land banking, with the increased rates kicking in if the development of the land hasn't started within 12 months of it being subdivided.
Mr Church says if Auckland can be fixed then house prices around the country will taper off.
The key to addressing supply is a dramatic lift in the extent to which kiwis are prepared to build or buy new dwellings in preference to existing dwellings. To date, the mix has been all in the wrong direction.
