One imagines that upon reading of the “plight” of Labour’s embattled young 23 year old IT consultant wishing to buy a $500,000 house in Auckland and being thwarted by the LVR regulation that says “no you can’t lever up to do this and shove the prices up further in the process”, the Reserve Bank Governor is likely to say “this is exactly the sort of total nonsense the regulation is designed to stop”.
He would be right in that this seems less a case of screaming poverty than it is of screaming “because I’m worth it” (BIWI)disease. A bit of “expectational adjustment” would seem to be in order.
Unfortunately, regulation is such a blunt instrument that in dealing with the aspirant IT property entrepreneur (who is obviously to be applauded for his efforts and needs no help from any regulators) the Reserve Bank is imposing widespread collateral damage on much less well endowed people looking for loans to finance housing and the property which acts as security for numerous small businesses.
I understand why the Labour opposition’s PR people can’t quite get the analysis done, spin not logic is their trade after all. That ought not to be the criterion for aspiring Prime Minister.