Historic rate cut and home buyers hit by LVR rules

There were no surprises when Graeme Wheeler, Governor of the Reserve Bank, cut the official cash rate to 2 per cent — yet another historic low for New Zealand.

In this column (and in my hugely popular podcast) of 28 November I predicted the rate would be down to 2 per cent by June this year — but what’s a couple of months between friends.

Clearly Wheeler kept the rate higher for longer in a last ditch bid to cool Auckland’s rampant housing market — but now he has bigger fish to fry — to stop the country slipping into recession.

Now, looking at the rate of inflation and the dismal economic activity — both locally and globally — I will stick my neck out once again and call it for 1.5 per cent by December. But don’t expect the greedy banks to pass on these cuts to borrowers.

Affordable housing
The Proposed Unitary Plan for Auckland currently has no provision for developers to provide affordable housing.

Something needs to be done to provide genuinely affordable homes — and this could include low-priced housing as well as rent-to-buy options, where home owners pay part mortgage, part rent — so they at least have a toe in the housing market.

Home ownership provides security of tenure, it’s an asset, and can be passed down the generations. Renting a home, which has a place in the housing mix, offers none of these.

Families hit by investment rules
The loan to value (LVR) lending restriction imposed on High St lenders by the Reserve Bank  to dampen property investment activity appears to be having  unintended consequences.

According to Mortgage Express, the 40 per cent   LVR rule has led to  home owners   struggling to get bridging finance.  Home owners who buy before they sell are being asked for a 40 per cent deposit.

Chris Kennedy, CEO of real estate firm Harcourts, says it’s vital LVR restrictions for home owner/occupiers are clarified.

“In an extremely competitive market, homeowners often find themselves trying to buy before they sell to avoid missing out on their dream home,” he says.   “Without clarification around the rules, LVR restrictions appear to be effectively shutting the people out of the market they were designed to help.”

Free food

I’m sure someone can come up with 100 reasons why this idea won’t fly in Auckland, but I was looking around some new housing developments and saw plenty of saplings  and newly planted areas of bush.

As lovely as the foliage will  be in years to come, I wonder if communities would be better served if the trees and bushes bore fruit such as apples, nuts, lemons, figs,  walnuts, oranges and grapefruit etc.

Imagine that; a never-ending basket of free fruit on the doorstep at a time when we are being encouraged to eat more fresh fruit and vegetables to help beat  diseases such as diabetes.

It can’t be a bad idea because it is already being done in places such as Nelson.  The kids can be out playing, get a bit peckish and grab an apple off a tree (they may even climb a tree — remember those days?)

The cook of the house, short of a tasty ingredient can pick it as required. Lemons for the fish, or apples for a tasty pie. Or pop them in a juicer for a fresh fruit drink — with no added sugar.

And while I’m on this bandwagon, how about council asking developers to include an area in each new development for communal gardening — where people can get together, grow vegetables, share expertise and equipment.

If central and local government health experts really want us to eat fresh, and provide children with fresh nourishment  then plan it into housing developments.
In short, when landscaping public areas, let’s plant for purpose — not just aesthetics. And while  we’re there, let’s increase our green credentials by popping solar panels on all the roofs to help communities power themselves.