Record house prices not caused by Reserve Bank - Adrian Orr

The Reserve Bank says it's not responsible for high house prices after figures released yesterday showed median house prices have surged nearly 20 per cent in the past year.

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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

The median house price across New Zealand increased by 19.8 per cent from $605,000 in October last year to $725,000, according to Real Estate Institute of New Zealand (REINZ) data.

Auckland’s median house price hit $1 million in October.

Reserve Bank governor Adrian Orr told TVNZ1's Breakfast this morning it's the bank's role to maintain financial stability.

"At the moment, economic activity inflation is well below our target range, employment is well below what we think is optimal, maximum, sustainable employment, so we are acting to speed the economy up, making credit and cash available."

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REINZ figures show Auckland’s median house price reached $1 million in October, 2020. Source: 1 NEWS

Orr said the challenge with the housing market was a lack of supply.

"It's a real challenge to be able to build, to be able to get access to the land, the cost. It's all of that human interaction that property rights interaction that's been a challenge," he said.

"It's not the Reserve Bank, what the Reserve Bank is doing is making sure credit is available to the banking system. It's the banking system who allocates capital and it's individuals out in society who borrows capital and who chooses to do what they do with it.

"Intergenerational fairness is something that I'd lose sleep over but it's not something that I could intervene with with the tools of monetary policy."