Reality of Market burst Bubble of Housing Policy.
Annual REINZ figures show inflation of house prices are 10% nationally and in Auckland they are 16%. The Reserve Bank’s LVR is not achieving what they want, first home buyers have simply left the market, making way for property investors.
Banks had less high LVR lending, but there was no evidence of it slowing house price inflation.
The Reserve Bank would like the house price inflation be closer to CPI, which is just a little higher than 1%, but aiming for 2%.
If the present LVR policy fails to rein in inflation, will the Reserve Bank raise interest rates to “burst the bubble”. A comment from the deputy RB governor, that the RB might just lean on the bubble and not burst it. We will have to wait and see what “lean” entails.
Filed under: REAL ESTATE | Tagged: Real Estate