Tying bank lending to potential rental income is one way to limit the splurge taking place in the property market. Photo / Supplied
At least until supply and demand are balanced, the Reserve Bank could cool the housing market by limiting credit for buying existing houses.
One way is to follow the prescription of Australian economist Steve Keen and put the commercial banks on the PILL.
Property Income Limited Leverage restricts the size of a mortgage to a multiple of a house's rental income, say 20 times.
For example, if a house would rent for $500 per week, $26,000 per year, then limit the amount you can borrow to buy the house to 20 * 26,000 or $520,000. Investors who wish to purchase existing houses could have a lower multiple, say, 10 times.
LVRs have the weakness that values rocket up as credit is poured into the market, permitting ever higher loans. But rents go up more slowly, only as incomes rise to pay for them, so the PILL would be more effective in holding prices to a level people can afford.
By using "credit guidance", which the Reserve Bank has the power to do right now, it can direct money more towards building new houses and towards business which creates jobs, and away from existing houses.
Such a change would be transformational for New Zealand.
Cliff Hall, Blockhouse Bay.
So the Treasury is now getting involved with trying to sort out the housing crisis. Which, as is beginning to dawn on people, is not necessarily a shortage of houses but too many houses being owned by too few people.
The banks and economy are now in a pickle because they have chosen to go down this farcical road of preferred lending to anyone who has a property asset to buy another property. The whole economy is now based on property.
If any plan that is dreamed up to help the housing crisis includes a possibility of house prices being reduced, the banks will be in trouble with defaults and their main income slashed.
How on earth can we get the people at the top to do the right thing and discourage investors and ownership of more than one house, if it is against their interests?
The pickle is the conflict.
Mark Hadida, Wanaka.
Kiwis are being declined entry into New Zealand daily - even for compassionate reasons. People desperate to come home for Christmas and to see loved ones – kept out from no fault of their own - owing to our grossly inadequate quarantine capacity of 6261 people.
These facilities, paid for by taxpayers at a daily cost of $2.4 million are apparently now being populated by criminals deported under section 501 of the Australian Migration Act.
One article (NZ Herald, November 23) stated: "More than two dozen criminals were kicked out of Australia last week, barely a fortnight after the deportation of another 28 men including two with outlaw motorcycle gang links… One of the new deportees is a paedophile."
One would have thought in the midst of the Covid crisis that our Prime Minister would have a valid reason to halt this bizarre one-way practice at least temporarily.
I have just read in your paper that a senior Australian Comancheros gang member is about to serve 4½ years in a New Zealand jail for various nefarious activities.
How come we can't send him home - perhaps with a container of possums for company?
John Clark, Glen Eden.
Adding to the growing flurry of confusing explanations about why our students are behind in reading, we now hear the Ministry of Education believes computers and tablets could be the problem.
Blaming digital devices for the decline in reading skills diverts attention from the underlying problem.
A plethora of international research shows the importance of explicit teaching of the alphabetic principle, phonemic awareness, and phonics, leading on to spelling and vocabulary. This gives students effective word decoding skills which enables them to learn and enjoy using digital devices. We are not consistently training our teachers to teach in this way. Rather than MOE funding evidence-based programmes, we persist with the current Reading Recovery model with some 20 per cent continuing to struggle, particularly Maori and Pasifika students.
If you can't read or write fluently, it will be extremely difficult to use digital devices and be able to engage in our technological society.
Barbara Stewart-Brown, Remuera.
Richard Prebble, SARS-CoV-2 has not become more infectious since mutating in
minks (NZ Herald, November 2). False positives are merely a nuisance; it is false negatives that are the worrying weakness in testing.
Our Covid-free status is due to the government taking advice from our epidemiologists, not "good luck".
The reason our government has struggled with the pandemic is simple. For years the cry of the neoliberals has been "Low Tax Small State", and we had no mechanisms in place to respond to a crisis. Incidentally, Trump ended the US early-warning programme just two months before the epidemic in Wuhan.
And boy the problems of seven billion people have just started. There are plenty of viruses that will infect us if we don't stop destroying nature.
Worse, millions will not have a home at all if we stuff the atmosphere with CO2. NZ must look like paradise to them.
Dennis N Horne, Howick.
Newly minted Green MP Ricardo Menendez-March, spokesperson for Seniors, thinks a "conversation is needed on why the term baby boomer has suddenly become a slur for some people".
It is simply because the term was used as a slur by his colleague Chloe Swarbrick and apparently is considered so "clever" that it has spread far beyond the initial audience.
Try turning that one around Ricardo.
June Kearney, West Harbour.
Further to the letter of John Scott Werry (NZ Herald, November 25), a matter rarely reported is that D. J. Trump has been steadily reducing American troop involvement in Iraq and Afghanistan notwithstanding howls of outrage from both sides of Congress and the Generals.
Indeed, Trump is the first US President for 40 years who has not started a new war. Credit where credit is due.
On the other hand, I notice that J. Biden has surrounded himself with strong warhawks, often those left over from his and Obama's regime.
What are the chances of the Trump withdrawals being totally reversed? I think "pretty good" because when Biden stops fracking, America will have to begin importing oil again and so will desire control over the Middle East.
G. N. Kendall, Rothesay Bay.
On Erebus
The memorial is attractive and well-designed and will look brilliant. People are often conservative and opposed to new works of art, such as Michael Parekowhai's wonderful waterfront sculpture, Give it time and even the Parnell nimbies will come to love it. J. Drake, Remuera.
On leave
Sick leave should only be used when an employee is actually sick; not taken as an annual entitlement. Gary Andrews, Mt Maunganui.
On wages
Comments around wages and productivity bring to mind the nursery rhyme See-saw Margery Daw, believed to be originally about child workers in the Victorian era. Johnny could earn but a penny a day, because he couldn't work any faster. Glennys Adams, Oneroa.
On oath
Our MPs should swear allegiance to New Zealand before the British Queen. Dave Pitches, Howick.
Rawiri Waititi objecting to any form of submission to "a sovereign that they never gave sovereignty to" is astounding; for surely that is exactly what Māori agreed to under article 1 of Te Tiriti o Waitangi. Graham M. Upton, Freemans Bay.
On Orr
Message to Adrian Orr: Stop printing money. I worked for mine. Reg Dempster, Albany.
On Friday
I have always understood Friday the 13th was regarded as an unlucky day. I cannot understand why the same connotation now seems to be applied to November 27. Pure commercialism? Peter Clapshaw, Remuera.
I see that New Zealand is acquiring a new national anthem, More, more, more, now, now, now. Everybody is singing it. Tony Barnett, Pukekohe.
On Trump
A Guardian article was headlined "Lame duck pardons turkey" . I thought the US Supreme Court has stated a president could not pardon himself? Rod Lyons, Muriwai.
