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For sale sign outside of house. - Source: ONE News -
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The Reserve Bank is looking to introduce new economic tools to cool down the housing market.
Interest rates are set to stay steady until the end of the year, easing pressure on mortgage holders, but the Reserve Bank and the Government are looking to introduce new economic tools to control rising prices.
Economists say the Reserve Bank cannot raise the Official Cash Rate without hurting farmers, exporters and businesses.
"The Reserve Bank is in a catch 22 situation. It needs to push up the Official Cash Rate to cool down the housing market but if it did that it would hurt the rest of the economy and push up the New Zealand dollar," Interest.co.nz's Bernard Hickey said.
But those working in the property market expect it will keep growing.
"We just think that it's just going to grow, particularly in a market like this where it's becoming more and more difficult to source a property and at a fair price," said Lisa Phillips, a property agent for investment property buyers.
The new rules could be signed off by July and may include:
- A loan-to-value restriction: An order to loan no more than 90% of a property's value.
- More cash and asset buffers: A demand for banks to put away more hard cash when issuing mortgages, so there's a buffer if repayments go belly up.
- More stable credit sources: An order for banks to finance loans from New Zealand and longterm sources rather than cheaper, riskier, offshore money.