Key says Auckland building consents up since Oct 1 start to high LVR limit; Govt puts up NZ$5 mln for America's Cup bid

By Bernard Hickey

Prime Minister John Key has indicated early consenting figures from the Auckland Council showed the Reserve Bank's high Loan to Value Ratio (LVR) limit imposed on October 1 had not restricted an expected surge in new house building.

"We are tracking week by week the consents coming out of the Auckland Council. They have been running at just the same rate, in fact an increasing rate, post the LVR restrictions as they were prior to it," Key told a post-cabinet news conference. "The argument that there'll be less houses built, -- three weeks into it -- hasn't been demonstrated," he said.

The Registered Master Builders Federation warned last month the speed limit on high LVR lending had already hit orders for new homes and could reduce national building consents by as much as 3,000 per year.

The Federation has had discussions with the Reserve Bank about exempting new home builds from the speed limit and is expected to release survey results later this week on the impact on new supply.

The issue of whether the speed limit is hitting new housing supply is particularly sensitive given the Government's response to a surge in house price inflation is focused on increasing supply of new houses.

The Reserve Bank has also estimated the restrictions could reduce consents by 40-80 per month or 2-5% from current levels.

It has also warned that the speed of new building in Christchurch and Auckland could be slower than the Government expected and may produce more intense inflationary pressures, which the Reserve Bank may have to respond to with higher interest rates.

Key also acknowledged that strong migration could further inflate house prices, although he also noted it was a sign of economic success that migrants wanted to come to New Zealand.

Elswhere, Economic Development Minister Steven Joyce announced the Government had agreed to an interim payment of NZ$5 million to keep Team New Zealand operational while it worked on whether to make a full bid.  Joyce told the news conference the amount was less than the NZ$6.5 million asked for by Team New Zealand less than the NZ$10 million committed at a similar stage by the then Labour Government.

Joyce said a final decision on whether to make a full bid would be made in the first quarter of next year and he expected any total Government committment, including the interim NZ$5 million, would be in the NZ$30-40 million range.

He expected a full analysis of the 2013 bid's economic results in March next year.