Houses & Holes at Macrobusiness reports on macroprudential steps being considered by the RBNZ. Macroprudential regulation are measures aimed to mitigate the risk of the financial system as a whole, or systemic risk, as opposed to the risk to individual participants.
The [Reserve Bank of New Zealand] says it wants to increase the amount of capital the country’s big four banks must set aside to cover potential losses from high loan to valuation ratio (LVR) home loans. Such a move would, in theory at least, make such lending more expensive for the banks.
Read more at RBNZ steps closer to macroprudential | | MacroBusiness.
Key problem is that the price of the average Kiwi house has reached seven times average Kiwi earnings, and they still rising rapidly – 10.4% last year in Auckland. This despite ending depreciation of rental property for tax purposes. It must end badly.