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Calls mounting for Government to do more to rein in soaring house prices

Calls are increasing for Government intervention in the housing market, with what Trade Me described as "staggering" interest in buying, coupled with rocketing house prices. 

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Nicola Willis said she does not want her children “growing up in a country where only the extremely wealthy can own a home”. Source: 1 NEWS

New Zealand’s median house price continues to soar, with Auckland hitting $1 million in October and the median house price across New Zealand increasing by 19.8 per cent, from $605,000 in October last year to $725,000, according to The Real Estate Institute of New Zealand (REINZ). 

'Staggering' interest in Auckland property as Trade Me's latest figures highlight skyrocketing prices

National's new revenue spokesperson, Andrew Bayly, said the Government needs to "rein in" the Reserve Bank after it moved this week to roll out a Funding for Lending Programme - which intends to see reduced costs for banks with an expectation that is passed on for home loans and businesses. 

"Low interest rates and the Reserve Bank’s money printing are simply adding fuel to the fire of New Zealand’s broken housing market," Bayly said last week. 

Even the Greens jumped on board, with co-leader James Shaw saying that "cheap bank loans are good for helping businesses, but lead to further skyrocketing house prices if not counter balanced by a tax on capital or wealth inflation".

"Low interest rates right now are benefiting property speculators and dealing a crushing blow to average wage earners who hope to be able to afford a home.

"For this reason, Government must implement measures to soften the impact of these measures."

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Opposition parties are having a go at the Government, and even a former Labour finance minister is chipping in. Source: 1 NEWS

Former deputy PM Sir Michael Cullen, who chaired the 2019 tax working group set up by the Government, today wrote an opinion piece in Stuff warning of "serious" long-term consequences of the Reserve Bank's latest monetary policy statement.

"It is bad enough that we keep seeing new rungs added to the top of the house price ladder," Sir Michael wrote. "It is even worse when those rungs are taken from the bottom of the ladder."

Today, Bayly said the Government needed to "temper the Reserve Bank’s latest inflammation of the property market" by immediately sending a letter of expectation. 

"The Government should be mandating the Reserve Bank to ensure its Funding for Lending Scheme is targeted at the more productive parts of our economy, not the housing market," Bayly said. 

Prime Minister Jacinda Ardern said Bayly's comment "seems a significant departure for a political party in New Zealand to move away from what has been long term consensus around the separation between politicians and the Reserve Bank".

"I need to leave the decisions of the Reserve Bank, to the Reserve Bank. It is fair to say the situation New Zealand finds itself in is not different to what most of the world is experiencing right now."

When asked last week his thoughts on the Funding for Lending Programme, Finance Minister Grant Robertson said it was a decision for the Reserve Bank. 

"What I want to make sure is that within the economy we're supporting small businesses, we're making sure that there's opportunities there for people to invest."

On if he was comfortable with the current housing market, Robertson said there was "a perfect storm of conditions here".

"With low interest rates, a lot of New Zealanders coming from overseas and the long legacy of the fact that over decades we haven't built enough housing, we're working on all those issues. We have our responsibilities to build houses to support first home buyers. The Reserve Bank has its responsibilities as well."

National leader Judith Collins said there would be a point "where people are asking when is this all going to end, in terms of essentially printing of money and quantitative easing" and that the Government needs to "front up" with housing policies. 

"What we're seeing is continual house price rises with no end in sight. 

"House prices are continuing to rise way out of line with what anyone would expect... given this was one of the big issues the Government took into the 2017 election and has failed miserably."

Ardern said looking at the first home buyers' grants would be a "natural place" for the Government to examine, and it is one area she has asked for advice around.  

National's housing spokesperson, Nicola Willis, said the "runaway" house prices were alarming.

"It's a major challenge, and the Government should be using every tool in the box to address it. It is impacting on New Zealanders from all walks of life.

"I don't want my children growing up in a country where only the extremely wealthy can own a home. That's not the New Zealand that any of us aspire to. It's wrong for the Government to say they've done all they can on this issue."

She said it should be considered to let first home buyers use their KiwiSaver to buy a house they do not live in. 

The Human Rights Commission said the Government "has a binding human rights obligation to create conditions which permit everyone to enjoy a warm, dry, safe, accessible and affordable home".