Labour get’s something right

Well roll me in brown sugar and dunk me in your coffee – Labour have got something right.

They probably read my blog this morning. But all the same – the point they make is the same that I do – a cap on mortgages will have disastrous consequences.

Lending restrictions being considered by the Government could threaten desperately needed new housing developments, Labour?s Housing spokesperson Phil Twyford says.
?Debt to income ratios that would limit the amount a home buyer could borrow to 4.5 times their income would undoubtedly drive many people out of the market.

?Everyone knows Auckland has an acute supply shortage with an estimated 40,000 shortfall of homes. The unintended consequence of debt to income ratios could be to jeopardise new developments and make the shortage even worse. ??

?Since comments by Reserve Bank Governor Graeme Wheeler yesterday, developers have inundated me with concerns that people buying new builds off the plan could be forced to withdraw, which could force developments to fold.

?A typical Auckland family only has an income of $81,900. With an income ratio of 4.5, that is only enough to buy a $369,000 home. However, median house prices in the city are now $812,000 ? that leaves them almost half a million dollars short.

?Yet again home buyers will bear the brunt of National?s refusal to take significant steps to address the housing crisis. It shows the Government is out of touch with the needs of most families,? Phil Twyford says.

I’m no fan of the way the Government has dealt with Auckland’s housing issues. The whole debacle is centred around stupid planning regulation imparted on Aucklanders by a totally inept Auckland Council.

Fixing supply is the only way to solve the problem. That ain’t gonna happen if caps are placed on lending.

And the financial fallout – caused when property developers go bust because projects complete without settlements – will be significant.

Playing with demand is a waste of time. A better idea is to stomp on Auckland Council and release more land and build more houses.


-Labour party