PHOTO: New Zealand property prices
- Central bank to impose tighter mortgage lending restrictions
- Finance Minister says measures to curb demand are imminent
New Zealand is clamping down on property investors in an attempt to rein in spiraling house prices.
The central bank said Tuesday it will reinstate mortgage lending restrictions on March 1 and tighten them further for investors from May 1. Finance Minister Grant Robertson also said today the government will unveil measures soon to curb housing demand, “particularly from those who are speculating.”
“A growing number of highly indebted borrowers, especially investors, are now financially vulnerable to house price corrections and disruptions to their ability to service the debt,” Reserve Bank Deputy Governor Geoff Bascand said in a statement. “Highly leveraged property owners, in particular investors, are more prone to rapid ‘fire sales’ that potentially amplify any downturn.”
The RBNZ removed lending restrictions last year to ensure they didn’t get in the way of policy responses to the coronavirus pandemic, but predictions of falling house prices never came to pass. Instead, prices soared as New Zealand’s economy performed much better than expected and record-low mortgage rates encouraged demand.
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