John Armstrong: Bank credit control working

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Phew, it looks like not being a scorcher! The Reserve Bank should be pleased even if the politicians will be very much in two minds about it.

The latest BNZ-REINZ residential market survey is the strongest indication yet that the central bank's imposition of credit controls is starting to work in what the bank feared was becoming a dangerously overheated property market in Auckland.

That it has largely been at the expense of first-home buyers is a major political nuisance for National. But the Government will wear that as long as a slowing market deserted by first-home buyers is not simply picked over by property investors and foreign buyers.

John Key may well curse that he failed to convince the Reserve Bank to exclude first-home buyers from the controls. Housing Minister Nick Smith's claim that the survey cannot be trusted because it is the work of those who have a self-interest in the housing market does not hold water. Almost in the same breath he was saying how much National was doing to help first-home buyers.

Finance Minister Bill English will be less churlish, having issued warning after warning about the dangers of the Auckland market collapsing and many people facing the prospect of paying off mortgages on equity that no longer exists.

Labour will argue the lending restrictions are hammering first-home buyers, the very people the Government should be looking after.