New homes exempt from LVR restrictions


The Registered Master Builders Association is delighted with the Reserve Bank’s recent announcement that the construction of new homes are to now become exempt from the Bank’s loan-to-value ratio (LVR) policy restrictions.

RMBA chief executive Warwick Quinn says the Reserve Bank has been very open in its discussions with them on the impact the LVR was having on new construction activity, and he says it has reacted very responsibly in exempting new construction.

“The impact on enquiry levels since the policy came into force was immediate, and as time progressed it was not only low deposit buyers impacted but those who couldn’t sell their homes and others with more than 20% equity,” Mr Quinn says.

“Collectively, we saw enquiry levels fall by 27%, which would have created a large hole in the residential building sector mid-2014.”

Mr Quinn says the issues related to ensuring housing supply was maintained so that the LVR policy could have maximum effect.

“With the exemption now in place, building companies will be able to plan with more certainty, and those companies who were contemplating restructuring in early 2014 and laying off staff will now hopefully not need to,” Mr Quinn says.

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