LVRs 'needed to rein in Auckland'

GREATER GOOD: Finance Minister Bill English says mortgage restrictions benefit the whole country.PHOTO/DUNCAN BROWN

First home buyers may have to wait "a few years" before the Reserve Bank drops Loan to Value Ratios (LVRs), says Finance Minister Bill English.

Visiting Hawke's Bay yesterday Mr English told Hawke's Bay Today LVRs succeeded in slowing the Auckland housing market, to the benefit of the whole country.

"If we don't get on top of the Auckland housing market everyone pays higher interest rates, so that is bad for your households and businesses," he said.

The Government was focusing "in intricate detail" to make the "way out of kilter" Auckland housing supply "more efficient".

LVRs limit the amount of low-interest mortgages banks can make but have been applied nationally, stalling regional real estate markets such as Hawke's Bay's.

"Hopefully in a few years the LVRs will not be needed and there will be a more settled housing market generally."

He said the Government would not consider incentives for businesses to shift to the regions "because they have to go where they think it is going to work". Regional economies were very different from cities.

"You are getting decisions here that aren't relative to Auckland because it is a different sort of economy.

Hawke's Bay had advantages over his native Southland because it was closer to larger populations and had a more balanced economy.

"Hawke's Bay is going to enjoy the benefits of not being as exposed to the dairy industry for the next year or maybe two."

He said he was optimistic the Ruataniwha Water Storage Scheme would succeed "on its merits".

Next year's Budget would address "longer term factors" affecting child poverty and we have a pretty good idea of what those are".

Mr English visited St John's College in Hastings where he said the Government's challenge was to provide students with all the opportunities they were capable of taking.

He warned students that by the time they were 40 they would each be supporting two older people such as himself. "We need you to be really productive or we are going to get a bit skinny."

Mr English met Hawke's Bay Chamber of Commerce members at Salt restaurant in Ahuriri.

He said the New Zealand economy was like "a cork bobbing on a global ocean" and the country needed to "understand the waves".

"Free trade agreements matter in Hawke's Bay. The reduction of the apple tariff in Taiwan is leading directly to applications across my desk for people to invest in Hawke's Bay, because we are going to get 20 per cent more for apples."

Hawke's Bay's seasonal low-wage economy "isn't going to change in a hurry, so let's get good at it."