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Key backs Reserve Bank's move

NZ NewswireNZ Newswire 19/07/2016

Prime Minister John Key © Getty Images Prime Minister John Key Making it more difficult for investors to buy houses was the right decision for the Reserve Bank to take, Prime Minister John Key says.

From September investors will have to come up with a 40 per cent deposit on nearly all the mortgages they apply for. That's an extension of the existing 30 per cent threshold in Auckland and will be across the country.

"The Reserve Bank made the right decision, it's one small part of solving the issue," Mr Key told reporters in Indonesia on Tuesday. "The balancing act, which I think the Reserve Bank has got about right, is that it doesn't want to take investors completely out of the market because they buy properties that people then rent."

Opposition parties are praising the bank for making the move, and they're criticising the government for not taking on the responsibility.

<span log-id="article-span" style="font-size:13px;">Green Party finance spokesperson Julie Anne Genter.</span> Green Party finance spokesperson Julie Anne Genter. The Green Party says the government's lack of action forced the Reserve Bank's hand.

"The government is still the property speculator's best friend - it has made it easier to buy a third, fourth or fifth house than your first," said finance spokeswoman Julie Anne Genter.

Labour's finance spokesman, Grant Robertson, says the Reserve Bank has shown it is prepared to do its bit. "This is the right thing to do... the bank clearly recognises we are in a housing crisis that is a threat to financial stability," he said.

The Greens want a capital gains tax on property deals, while Labour would ban offshore speculators from buying houses and end tax breaks for landlords.

NZ First leader Winston Peters doesn't think the bank's moves will make much difference. "It ignores the two great drivers - high immigration and offshore buying," he said. "The fact is offshore investors are not being provisioned by New Zealand-based banks - they will carry on as usual while New Zealand investors will simply have to stump up a greater deposit."

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