NZ Reserve Bank takes solid action to curb Auckland proporty prices.

With the publication of its May financial stability report, today the Reserve Bank of New Zealand decided to take some solid measures to curb house price inflation in Auckland. An important policy change, proposed to take effect from 1 October, will require residential property investors in the Auckland Council area using bank loans to have a deposit of at least 30 percent.

The Reserve Bank also establishes a new asset class for bank loans to residential property investors. Banks will be expected to hold more capital against this asset class to reflect the higher risks inherent in such lending. These are proper policy responses, may other central banks follow.

 

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