MEDIA RELEASE – Certified Builders wants new home building exempt from LVR policy

Certified Builders Association of New Zealand, the country’s largest building trade organisation, is urging the Reserve Bank to review its Loan to Valuation Ratio policy and exempt new home building from the policy.

Certified Builders Chief Executive Grant Florence is concerned that the Loan to Valuation Ratio restrictions are having a major impact on sales enquiries, which will ultimately impact future building activity across New Zealand.

“Specifically, in the Auckland metropolitan region where the lack of housing stock has been well reported, the restrictions will impact on the ability of the building industry in general to build houses to meet the demand through not adding to the housing stock,” Mr Florence said.

“Any ‘roadblocks’ that diminish the chances of the regions in New Zealand continuing their slow but sure recovery cannot be for the good of our country.”

He said newly built home enquiries and housing consent statistics show that many of the regional areas in New Zealand (outside of Auckland and Christchurch) are still in recovery mode from the severe downturn during the past three to four years.

“We are concerned (and have received some anecdotal feedback from our members) that this policy is having a negative impact on new home buyers’ confidence, and homebuyers are viewing this uncertainty negatively. And the irony of it is, in many cases, they are either cash buyers or are buyers who have equity substantially more than what is being addressed by the Policy,” Mr Florence said.

Certified Builders has 2,800 individual builder members 1,700 business member firms. This represents a substantial proportion of the builders actively involved in the construction industry in New Zealand.

The majority of Certified Builders members are small-medium building firms whose focus is on the more complex, architecturally-designed, residential and light commercial projects. It has some franchised or high-volume home building companies. All Certified Builders members must hold a formal trade qualification in the building/construction trade. This makes Certified Builders different from the other more widely-based industry organisations.

“We understand that Government has (or is developing) a number of social and other housing accord initiatives but our fear is that these initiatives will only result in addressing a small percentage of what is required.”

He said the building and construction sector has suffered over many years from boom and bust cycles.

“It has been well documented that this cyclical nature on the whole has been negative for the building sector and the country as a whole. Not to say the least this cyclical nature has been a major impediment on the building sector improving productivity and also the risk nature of construction techniques.

“We are therefore concerned that this Policy will lead to pent up demand which when released will lead us into another ‘boom and bust cycle. This is especially so when the additional effects of the Christchurch rebuild is taken into account,” Mr Florence said.

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