'Tide is changing' on house prices - Reserve Bank

Katie Bradford
Source: 1News

Times are changing and the tide is turning when it comes to house prices, the Reserve Bank is warning.

WELLINGTON, NEW ZEALAND - MARCH 16: Reserve Bank Governor Adrian Orr speaks during a press conference at the Reserve Bank of New Zealand on March 16, 2020 in Wellington, New Zealand. The New Zealand Reserve Bank has cut its official cash rate of 1 percent to a record low 0.25 percent in a bid to help support the economy against the impact of the COVID-19 pandemic.  (Photo by Hagen Hopkins/Getty Images)

In a speech to a retail conference this morning, Governor Adrian Orr said a number of factors are leading to changes in the currently “unsustainable” housing market.

He took some blame for low interest rates and the resulting housing market frenzy in recent times.

But he said the “tide is changing, supply is responding, population growth is no longer, it’s stagnating, and interest rates are on the rise”.

Over $1.5 trillion is invested in housing in New Zealand and banks have over 60 per cent of their lending in home mortgages.

“It’s a very large egg.”

From today, loan to value restrictions have been further tightened.

And the central bank will next month start consulting on the introduction of debt to income limits.

BNZ has already introduced DTIs, meaning people can only borrow up to six times their income.