Opinion: Reserve bank had no option but to pull the handbrake

Opinion: Reserve bank had no option but to pull the handbrake

Rome's been burning and the Reserve Bank's finally stepped in to play firefighter.

Not a moment too soon, lads.

It may be late and no one wins today, but something had to be done to pour cold water on the out of control housing inferno.

Property investors across the country will now be forced to come up with a 40 percent deposit. This is way overdue.

Make no mistake, the Reserve Bank has done the right thing - it had to do something - the Government's housing measures have been timid and in many ways have only fuelled the demand for more houses.

The facts and data clearly show the Government has done nothing at all effective to stifle housing demand or house prices and even less when it comes to reigning in property investors.

Investors have run wild in a free and easy, largely unregulated market.

Almost 50 percent of all house sales are going to investors and around 80 percent of South Auckland sales have gone to investors.

First home buyers have been seriously squeezed or pushed out entirely.

The new rules are being urgently introduced to try to put a lid on New Zealand's out of control prices.

And let's also be clear - it's been done because the Government has failed to bring in any of its own measures targeting investors. The Government has encouraged speculation.

But the hardest bit to swallow in all of this today will be for first-home buyers. They get no break, and indeed all first-home buyers nationwide will have to come up with a 20 percent deposit. This will hit first-home buyers in the provinces particularly hard.

It's a blunt tool, but in face of the slow progress at Government and Local Government level, the Reserve Bank had no option.

Today's moves are also a clear admission that we have a housing crisis.

We have too few houses being built, record immigration levels and interest rates that once again look set to drop next month. That will continue to fuel demand.

The Government has for months claimed it's done enough and this is a challenge but not a crisis.

The Reserve Bank just totally undermined all that vacuous waffle with real action.