‘I’m never worried about housing’: Prime Minister Jacinda Ardern on rising house prices

Prime Minister Jacinda Ardern admitted that she is concerned about the housing market as house prices continue to rise amid a period of tepid economic growth.

“To be honest, I am never worried about housing,” ZB told Newstalk this morning.

This comes as house prices continue to head north as the New Zealand economy remains in recession.

Median house price in New Zealand is now $ 685,000, an 11 percent year-on-year increase, according to the Real Estate Institute NZ’s house price index.

Economist Tony Alexander told OneRoof Property Report: “I thought house prices would fall on average by 5-10 percent because we have no experience of a global pandemic.”

ASB senior economist Jane Turner said that house price growth is so strong that if the Reserve Bank doesn’t intervene, it risks “stoking the fire of a housing market bubble.”

Ardern told ZB this morning that the housing market was outperforming what anyone would expect from the Covid environment.

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

Ardern said “a lot of it” has been New Zealanders coming home, “everyone will know anecdotally about Kiwis coming home, some who have been away for decades.”

“You can’t blame them, but it will have an impact.”

But ASB data shows that in the three months through August, there has been a 134 percent increase in home loans to highly leveraged real estate investors.

Its economists point out, however, that strong demand for housing across the board, coupled with chronic housing shortages, means that the housing market is now very tight and house prices have risen sharply to reflect that.

“The Reserve Bank must recognize that the risks in the housing market have changed dramatically; they no longer face the risk of a fall in house prices, but rather a sharp rise in house prices.”

Meanwhile, Finance Minister Grant Robertson has advanced a meeting with the Governor of the Reserve Bank, Adrian Orr, before the publication of his long-awaited Statement of Monetary Policy on November 11.

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

When asked if the reason for moving his meeting with the Reserve Bank forward was to pressure Orr to reinstate the LVRs, Robertson deviated.

“I will have more to say on monetary policy and other matters shortly. I intend to meet with the Governor of the Reserve Bank in the next few days.”