The Reserve Bank has exempted high LVR loans to build new homes, but its decision not to exempt loans for new homes already built on 'spec' has highlighted the weaknesses within New Zealand's house building sector.
The Registered Master Builders Federation (RMBF) has released survey results showing 15-20% of all new home builds come from buyers borrowing more than 80% of the value of the house and land package.
Limited competition, high duties on imported supplies and kickbacks to builders are among the issues tackled in the Ministry of Business, Innovation and Employment (MBIE) options paper on building material costs released on Wednesday. MBIE even suggested testing new building materials and techniques on state housing projects as one way to tackle fear of innovation in the wake of the leaky building saga.
The Registered Master Builders Federation warned last week it was seeing early signs the Reserve Bank's high LVR speed limit was hitting new orders for builders who cater to high LVR borrowers and first home buyers in particular. Prime Minister John Key was unconvinced when questioned about the risk of an 'unintended consequence' from the policy on plans to build more houses.