Labour leader David Cunliffe says Auckland's housing market should not dictate whether Wanganui people can buy their first home.

Rules introduced today by the Reserve Bank allow commercial banks to make only 10 per cent of their new residential mortgage lending to buyers borrowing more than 80 per cent of the value of the property. This means first-home buyers will need to save a 20 per cent deposit before applying for a mortgage.

Newly elected Labour leader David Cunliffe spoke to the Chronicle yesterday about the changes, saying it was "clearly nonsense" to have every first-home buyer in the country bound by rules created to stop Auckland's price rise.

"It's an important issue as it's part of the Kiwi dream, to work hard and play by the rules. We don't want to be kept out of the market by property speculators and tax advisers. Say the house price is $170,000. Instead of saving $17,000 cash you've now got to save $34,000. It's pretty tough on a regional income to save that 20 per cent."


A Labour Government would combat the policy using tools like a capital gains tax and building low-cost homes with its KiwiBuild scheme. Labour would exempt first-home buyers from the current policy and urge the Reserve Bank to apply its expertise to areas of high house pricing and find out what was behind the rises, he said.

"We would want to look at the memorandum of understanding signed by the minister of finance and the [Reserve Bank] governor, amend it to make their obligations clear ... it's pretty silly for the Reserve Bank to be creating housing policy.

"It particularly sticks in my craw because of the falling house prices in Wanganui. Why should you be clobbered by Auckland? It's just penalising innocent young people."