WELLINGTON, June 2 (Reuters) - New Zealand's government said on Thursday it planned to require local authorities to free up land for housing in an attempt to curb soaring property prices, which have the central bank worried.
The policy would require local councils to set targets to provide enough land for new housing to match projected growth in their city or region. They would then be required to exceed that target by 20 percent over the following 10 years and 15 percent over the following 30 years to ensure oversupply.
The government planned to implement the policy in October and was consulting stakeholders until mid-July.
"This policy is about a culture change to support development that connects planning decisions to economics...and recognises the national importance of housing," housing minister Nick Smith said in a statement.
New Zealand's rate of house price growth is second only to Qatar's, according to the International Monetary Fund, in large part due to an influx of foreign investors and migration.
Data released by government property valuer QV on Wednesday showed house prices had risen 12.4 percent in year to May. In the country's largest city, Auckland, prices had risen 15.4 percent to an average price of NZ$955,793 ($652,233.14)
. The Reserve Bank of New Zealand (RBNZ) has implemented avariety of measures to cool New Zealand's hot housing market, including imposing curbs on lending. However, it has also reiterated that supply is a key issue .
In its latest bi-annual financial stability report the RBNZ said it was closely monitoring developments to assess whether further financial policy measures would be appropriate. However, "reducing the imbalance between housing demand and supply in the Auckland region remains essential if house price appreciation is to be contained over the longer term," it said.
Amid record migration levels, investors seeking strong capital gains, and record-low interest rates, some commentators believe the government's plan alone would not curb soaring house prices.
"It will help at the margin but the issues facing the Auckland property market are pretty diverse," said ANZ Bank Chief Economist Cameron Bagrie.
"This will help, but it's no silver bullet," he added.
($1 = 1.4654 New Zealand dollars)
