John Key announces $1 billion housing loan fund

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Video John Key announces $1 billion housing loan fund

Property investors aren't happy about Prime Minister John Key's suggestion that the Reserve Bank should get a move on if it intends tightening their loan restrictions.

As house prices reach new highs, Quotable Value thinks investors are snapping up properties because they're anticipating changes.

"It appears this may have led to a surge in investor purchases in various housing markets around the country over the past month," QV said on Tuesday.

Following the release of QV figures on Tuesday which showed the average New Zealand house value has increased by 5.6 per cent in the last three months, the fastest rate in the last 12 years, the Prime Minister said the Reserve Bank should take a look at investors and consider targeting them with tougher lending rules.

House prices shot up 5.6 per cent nationwide in the last three months. Source: QV.

Mr Key said the Reserve Bank could control that part of the market and in his view it should make some moves to do that.

When he was questioned over whether he believed the central bank should consider extending loan-to-value ratios (LVRs) above the 30 per cent limit in Auckland, Mr Key said he believed they "should make some movements in that area".

"If they're going to make changes, probably they should get on with it," he told reporters.

The Prime Minister said the Reserve Bank should consider targeting investors with tougher lending rules.

The Property Investors' Federation, which represents the country's landlords, has taken issue with that.

"The prime minister's advice to further hinder the provision of rental properties in New Zealand is misguided," said executive officer Andrew King.

"Over the past year rental property owners have been stung by higher LVRs (loan-to-value ratios), particularly high in Auckland, and higher risk weighting requirements.

"There comes a point when you have to ask - if all these measures aren't slowing house price growth, perhaps we are shooting at the wrong target."

Property investors are not happy with the Prime Minister's suggestion. Source: Getty.

In November last year the Reserve Bank restricted investor borrowing in Auckland to 70 per cent of the value of the property they were buying.

In the rest of the country the limit is 80 per cent.

The Reserve Bank could increase the restriction on property investors in Auckland, or across the country.

The Auckland market has increased 16.1% year on year. Source: Getty.

Reserve Bank deputy governor Grant Spencer is due to make a speech on Thursday and there's speculation he will use it to outline new measures.

Opposition parties hit out over 'half-measures'

The Green Party has criticised Key's "half-measures", saying it would seek to introduce a comprehensive capital gains tax and undertake a major state-sponsored house build.

"They simply divert attention away from the few investors making extreme profits from this property price bubble," Green Party leader James Shaw said.

Both Labour and the Greens think Key's actions on housing are "half-measures". Source: Labour Party, Facebook.

Labour Party leader Andrew Little said Labour would embark on a "large-scale state-backed affordable home building programme and crack down on overseas speculators pushing house prices beyond the reach of most New Zealanders".

The Labour Party is expected to announce its "comprehensive" housing policy at the weekend.

Little indicated Labour would be continuing to push or expand the KiwiBuild policy the party announced in 2012, which promised to put 100,000 families into new affordable homes within 10 years.