Reserve Bank fiddles while Auckland burns

The first hint of a shortage of housing stock in Auckland goes back about five years, when building firms began saying there was a lack of skilled workers in the SuperCity. Many had skipped off to Christchurch to help with the post-quakes rebuild (there is now an oversupply of property there).

Then, three years ago, the housing market in Auckland showed solid signs of warming up. By the end of 2014 it had reached boiling point, and despite all the vocal concern about rapidly rising prices in the SuperCity, neither the government, nor the Reserve Bank, nor Auckland council did anything meaningful to turn down the heat.

Steve Hart's weekly property podcast:

One of the issues seems to be that the Reserve Bank and the Government appear unable to react with any speed to emerging trends. Rather than use common sense, they wait until there is a fully documented and peer-reviewed problem before dreaming up half-baked solutions that seem more to do with politics than people. And Land Information's attempt at measuring the sales of homes has delivered -- at best -- questionable data.

Government tell us it is a supply problem, we need to build more houses. That is a problem that can't be fixed this afternoon.

Others want immigration reduced to take the strain off housing, schools, the health service and infrastructure. Last week, it was all the fault of land-bankers, some of whom don't live here.

So what's left? More rules on borrowing money? That doesn't stop cash buyers. Debt-to-income ratios? That would have been good two years ago, but is unworkable now, particularly in Auckland. All that's left is to follow Australia's lead.

Across the Ditch, only Aussie citizens and Kiwis can buy existing homes -- everyone else has to build new. It means every family moving to settle in Australia has to build a new home or rent one. What could be simpler? Homes are constantly built to meet demand.

Meanwhile, Graham Wheeler, Governor of the Reserve Bank is (yawn) "closely monitoring developments to assess whether further financial policy measures would be appropriate". Young home buyers can sleep tight then -- our best man's on it.

Lifestyle

Sales of lifestyle properties totalled 2376 during the three months ending April, up 22 per cent on the same time last year according to the Real Estate Institute.

It says the national median price for lifestyle properties is $562,000, up $10,000 in 12 months. The national median number of days for a lifestyle property to sell is 67 and the Auckland median is 45 days.

Interest rates

Whispers are the Reserve Bank will cut the OCR to 2 per cent on June 9, which could see floating mortgage rates slip to around 5.35 per cent. Among the better fixed-rate deals today is ASB's 4.19 per cent for two years, and the Coop's 4.99 per cent for five years.