Housing has been a major and growing problem for the Government, and their lack of action in trying to stem escalating prices has been one of the biggest legitimate criticisms of them.
And Finance Minister Steven Joyce appears to be stalling further because it is election year.
Stacey Kirk: Facing a firing squad, what’s left to do but stall?
An old advertisement used to run on TV, in which a man facing firing squad asks for a Pixie Caramel as his last request.
In the extended time it takes for him to down that long chew, his shooters fall asleep and he scales a prison wall – evading consequence for as long as he can outrun the inevitable chase that follows.
The man facing firing squad is Finance Minister Steven Joyce, and his Pixie Caramel is a cost-benefit analysis of debt-to-income ratios (DTIs).
That doesn’t look anything like Joyce but you get the picture.
The Reserve Bank wants another clip on its tool belt to apply DTIs – a restriction which would limit how much banks could lend to people, based on their income.
The move is intended to avert a personal debt crisis that could occur if buyers continue to borrow large amounts to get a foothold in a rampant housing market, but become unable to service their debt once interest rates start to rise.
But the collateral damage would likely see a saw cut through the bottom rung of the housing ladder.
Thousands of first home buyers would be priced out of the market, many on incomes where a cap on what they could borrow wouldn’t be able to buy a one-bedroom home in Auckland – a city where $1 million is now the average house price.
“Not in my election year, you don’t,” Finance Minister Steven Joyce has effectively told Reserve Bank Governor Graeme Wheeler.
He has manoeuvred to divert the Reserve Bank from undertaking the controversial housing measures in an election year, by asking them to carry out a cost-benefit analysis and public consultation for the measure before he agrees to give them the ability.
The greater good versus political priorities in election year?
And while Joyce’s move may be cynical, it does show a sure-footed approach to political management and exactly why Joyce has doubled repeatedly as National’s go-to campaign manager.
He managed a National disaster in the Northland by-election campaign.
Stuck against a brick wall with a crosshair aimed between his eyes?
In election year, Joyce doesn’t want the headache.
What’s more important, Joyce’s head or the New Zealand property market?
With a risk of stuffing housing even more and also bombing in the election.