WELLINGTON (Reuters) - New Zealand Prime Minister John Key on Friday urged the central bank to quickly impose curbs on the nation’s hot housing market, signaling an urgency to prevent a potential collapse in the real estate market.
“I think they should get on with it,” Key said in an interview published on news website stuff.co.nz.
Key spoke after Reserve Bank Deputy Governor Grant Spencer said the central bank is contemplating making its mortgage lending rules more stringent in a speech late Thursday [L4N19T4E2].
The Reserve Bank of New Zealand (RBNZ) said it was considering tightening its loan-to-value ratios further, possibly by the end of the year. It was also examining whether it should limit debt-to-income ratios, but said “further investigation of this option will be undertaken.”
Key said that signaling that is “all very well and good but all it does is encourage investors to say I better move now rather than later.”
New Zealand’s housing prices, spurred by low interest rates, high levels of immigration and supply shortages, are the second fastest-growing in the world after Qatar, according to the International Monetary Fund.
Policymakers are worried the rapid gains could trigger a collapse and hit the economy at a time when its main dairy exports are struggling and slowing world growth is heaping more pressure on domestic activity.
Reporting by Rebecca Howard; Editing by Shri Navaratnam