Property Institute of New Zealand Chief Executive, Ashley Church, is calling upon finance minister Stephen Joyce to renegotiate the Government's target agreements with the Reserve Bank.
The move comes after governor Graeme Wheeler
’s announcement yesterday that he will step down at the end of his current term on September 26 this year.
According to Church, the governor’s resignation gives the Government a timely opportunity to review that policy and its effect on the housing market and says that many of the banks decisions have actually damaged the market and substantially slowed down the rate at which the construction of new homes might otherwise have caught up with demand.
"While the Government, the Auckland Council and the private sector have all been focused on addressing the supply issue in Auckland - the Reserve Bank has been unashamedly at odds with the market in its attempt to artificially cool demand. Sadly, it's failed, and has only served to make the problems in Auckland even worse".
Church said he urges the Government to “immediately modify” existing Reserve Bank policy, stressing in particular the LVR restrictions on first home buyers.
"The decision to put LVR restrictions on first home buyers has been directly responsible for stopping thousands of kiwis from buying a first home - and the longer they stay in place the worse the situation gets,” said Church.
“We don't have the luxury of waiting till September till those restrictions go - they need to be removed right now".
He would also like to see the Government adding a 'Housing Market Supply' clause to its contract with the Reserve Bank which would require the Bank to consider the effect its policies would have on overall supply.
"If such a policy had been in place two years ago the disastrous LVR restrictions would have been much more carefully considered - and there would be no talk of debt-to-income limits on lending".