LVR has worked but Auckland risks remain: ANZ
The RBNZ loosened LVR restrictions for owner-occupiers and investors last week, following a period of stabilising house prices, particularly in Auckland, over the past year.
In their weekly update to the market, ANZ’s economists, led by Sharon Zollner, say LVR has “worked”, with NZ household debt to disposable income levels at 167%, compared to near 190% in Australia. Despite this, the bank warns the Auckland market may not have been tamed for good: “The Auckland housing market is behaving itself but history warns against ever ruling out a second wind.”
ANZ economists say LVR will remain a key part of the Reserve Bank’s “regulatory toolkit”, but could be tightened again if lending runs out of control in key cities: “All up we see the housing market remaining contained, with the LVR restrictions still ‘tight’ at these levels, but the RBNZ won’t hesitate to adjust them in either direction should it deem warranted.”
The bank forecasts a relative period of stability in New Zealand, with competitive mortgage rates, population growth and availability of financing tempered by tougher regulation on landlords, the threat of capital gains tax, and the foreign buyer ban.
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