'I am never not worried about housing' – PM on rising prices

Photo: RNZ
The median house price across New Zealand is now $685,000 – an 11 per cent year-on-year increase, according to the Real Estate Institute NZ House Price Index. Photo: RNZ
Prime Minister Jacinda Ardern has admitted she is worried about the housing market, as house prices continue to rise amid a period of tepid economic growth.

"I am never not worried about housing, to be honest," she told Newstalk ZB this morning.

This comes as house prices continue to head north, as New Zealand's economy remains in a recession.

The median house price across New Zealand is now $685,000 – an 11 per cent year-on-year increase, according to the Real Estate Institute NZ House Price Index.

Economist Tony Alexander told OneRoof Property Report: "I thought house prices would fall on average 5 to 10 per cent because we've got no experience of a global pandemic."

ASB senior economist Jane Turner said house price growth is so strong that if the Reserve Bank doesn't step in, it risks "fuelling the fire of a housing market bubble".

Ardern told ZB this morning that the housing market was outperforming what anyone would have expected in this Covid environment.

She said that no one had predicted that we would see a record month for home loans in October.

Ardern said "a lot of that" has been New Zealanders coming home – "everyone will know, anecdotally, stories of Kiwis coming home, some who have been away for decades".

"You can't blame them, but it will be having an impact."

But data from ASB shows that in the three months to August, there has been a 134 per cent increase in mortgage lending to highly leveraged property investors.

Their economists do point out, however, that strong housing demand across the board, coupled with chronic housing shortages, means the housing market is now very tight and house prices have lifted strongly to reflect that.

"The Reserve Bank needs to recognise that the housing market risks have shifted dramatically – no longer are they facing the risk of falling house prices, but that of strongly increasing house prices."

Meanwhile, Finance Minister Grant Robertson has brought forward a meeting with the Reserve Bank Governor Adrian Orr, ahead of the release of its much anticipated Monetary Policy Statement on November 11.

ASB, and other economists, have called on the central bank to reinstate loan-to-value lending restrictions to help cool the housing market.

Asked if the reason for bringing forward his meeting with the Reserve Bank was to lobby Orr to reinstate LVRs, Robertson deflected.

"I'll have more to say about monetary policy and other matters shortly. I intend to meet with the Reserve Bank Governor within the next few days."

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