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Judith Collins wants brakes on lending that's 'continuously pushing up house prices'

As housing prices get "worse and worse", National Party leader Judith Collins says no one wants to lose their life savings and be left with debt if the housing market crashes.

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The National Party leader says no one wants to lose their life savings and be left with debt if the housing market crashes. Source: Breakfast

Her comments come as Prime Minister Jacinda Ardern has been assailed from both sides of the political spectrum this week about her Government's apparent lack of effective action on the housing crisis as prices continue to soar.

Auckland's median house price hit $1 million in October while the median house price nationwide increased by 19.8 per cent, from $605,000 in October last year to $725,000 this October, according to The Real Estate Institute of New Zealand (REINZ). 

Yesterday, National's revenue spokesperson Andrew Bayly said the Government needed 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. 

However, this morning on TVNZ1's Breakfast, Collins said a lot of the extra lending money the Reserve Bank was making available was actually going straight into existing houses rather than new builds or the business community.

"I think what people would want to see is that the Reserve Bank, if they're going to pump that sort of money into the trading banks, that they do actually focus on growing the economy because I just think this housing bubble we've got now is just getting worse and worse and what nobody wants to see is for that to burst and all of a sudden people having lost savings, plus being left with debt."

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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

Collins said it was important to deal with the factors that drive up house prices.

She said the Government needed to reform the Resource Management Act and get rid of disincentives that councils now have to approve land for new housing.

"A lot of those are around their own financial situations so, yeah, the Government could do a lot more on this. But the other thing, stop lending to just continuously push up house prices.

"A letter to the Reserve Bank just to say 'when you're pushing this money into the trading bankers, how about you ask them to put a bit more effort into assisting businesses but also property developers who are putting in place new housing - why not them?'" Collins suggested from the Government.

Yesterday, though, Prime Minister Jacinda Ardern said, "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," she added.

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Orr spoke to Breakfast after new figures showed median house prices surged nearly 20 per cent in the past year. Source: Breakfast