The Prime Minister remains hopeful that recent moves by the Government to curb an “unsustainable” housing market will have an impact on New Zealand’s red hot housing market.
Jacinda Ardern told Q+A that the Government is hoping to "take the exponential increases out of the market that we've seen," adding they had seen increases upwards of 20 per cent in the past year.
"I don't think anyone believes that that is good for New Zealand's economy. It is certainly not good for our first home buyers and creates potentially a bubble that's damaging for all," she said.
However, she’s unclear exactly what impact the policy changes will have, saying even the experts consulted don’t have a consensus on what will happen, apart from “that it would make a difference, the quantum of which is very difficult to pinpoint”.
But she was adamant the Government needed to act, despite the varying and contradictory advice from Government departments. “It is irresponsible, I would argue, not to take action when you are faced with something as exponential as a 20 per cent increase in house prices.”
However academic and writer Emmaline Pickering-Martin argued the Government was not moving quickly enough, given the way housing, child poverty and poor mental health intersect.
"It’s not fast enough for people who are facing these issues. So sure they’ve got the wrap around $5.1 billion or whatever package that has Working For Families and all these other things, but what that’s not matching is the housing price rise in rents," she said.
“There are no rent caps. $750 a week in West Auckland for a little two bedroom house that hasn’t met the Healthy Homes standard yet because it doesn’t have to for another three years.”
Economist Bernard Hickey says that decision to move cautiously was a conscious choice by the Prime Minister and her Government, as Finance Minister Grant Robertson has publicly reaffirmed, he is committed to low levels of Government debt.
“She is choosing to keep debt low and keep interest rates low for those people who own homes above reducing child poverty and really moving much more quickly to deal with housing and mental health and other issues,” he said.
“The Prime Minister and the Government have made choices to not speed it up. The argument would be, ‘Well, we cannot afford to do these things this quickly.’ That is simply not true. Just in the last couple of weeks, America has gone out of its way to halve child poverty almost immediately by simply increasing incomes for those people who are at the poorest level.
"New Zealand has very low net debt, but the Government is choosing - the Prime Minister is choosing - not to increase benefits in the way it was recommended by the Welfare Advisory Group."
NZME Business Editor Fran O’Sullivan argued the greatest need was to increase the supply of houses.
"The fundamental issue is they are going to have to get in and build houses ... It is all very well to deal on one side of the equation with tax deductibility, that type of thing, which brings in an extra 500 million to a bill[ion].
"The real thing is actually using the powers they have and building and just legislate. They have got a majority. Legislate; legislate to acquire land, legislate to set the price at which they buy that land."
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