Former Prime Ministers Helen Clark and Sir John Key have weighed in on the Government’s housing package .
In the bid to contain a red-hot property market, the Government announced yesterday, among other things, it would invest $3.8 billion into infrastructure and development, extend the bright-line test and expand eligibility for first-home buyer assistance.
Appearing on Breakfast alongside Clark, Key this morning was asked whether the current situation with house prices could be called a "crisis".
“Well you’ve had very rapidly-escalating house prices recently, obviously. You’ve had them for a long period of time, to be blunt, but you’ve certainly had them at a level that’s arguably not sustainable over the past year or two,” Key said.
Key, who's also ANZ’s chairman, he said housing affordability was a “complex issue”.
“Low interest rates are really what’s fuelling this, probably, more than anything else.
“In a way that’s actually kind of a good thing — not the house price escalation — but low interest rates do bring in lots of people that can afford to borrow the money to buy, say for instance, their first home.”
He said it was still clear New Zealanders had a culture of aspiring to own homes.
“We’ve got to do everything we can to get people into a home if that’s their aspiration. For most New Zealanders, it is.”
Meanwhile, Clark said she was hopeful the changes announced yesterday “makes a difference”.
She said she was able to afford a home at a young age, and that many Kiwis would have the same dream.
The economic and political commentator says time will tell if the new rules will give first-home buyers an advantage when buying property.
Key avoided calling rising property prices a “crisis” during his time as Prime Minister, when average house prices in Auckland went from $493,000 in 2007 to $975,000 in 2016. As Opposition leader in 2007, however, he labelled the housing situation in New Zealand a “severe crisis”.
In an exchange with Green MP James Shaw in 2016 during Question Time, Key blamed the previous Clark government for “mismanagement” that saw interest rates go to 11 per cent, which had a “huge impact on [housing] affordability”.
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