PM Jacinda Ardern on House Prices: ‘It just can’t keep rising at the rate it is’

By RNZ

Prime Minister Jacinda Ardern says she wants to make sure early home buyers are able to enter the market after it was revealed this morning that house prices have risen nearly 20 percent.

Home prices have risen 19.8 percent year-on-year with the median now at $ 725,000. Ardern said this afternoon that the figures show an increase in first-time buyers in the market since 2017, but that investors in the market have remained the same.

“Obviously we want to make sure that our first home buyers can enter the market, that’s something we have on our mind …”

“It just can’t keep increasing at the current rate,” he said of the price increase.

Meanwhile, Act Party leader David Seymour took aim at Reserve Bank Governor Adrian Orr and said the country was monetizing its debt, avoiding tough decisions and instead giving itself artificially low interest rates.

Ardern says that with the mandate the Reserve Bank already has, they are using tools that are likely to have an impact on the housing market.

“They have the ability, through the LVR regime, to specifically target that end of the market. Given that first-time buyers will also benefit from the fact that we have historically low interest rates. But what it is doing is also causing potential heat in the market for others looking to buy, which is why the Reserve Bank is specifically looking at the LVRs that are being used, about which they are consulting now, and that will potentially make a difference.

She said having a kind of emphasis on LVRs with investors and people buying second properties was a Reserve Bank affair.

“A house is the most important asset that most families will have, and of course they want to make sure the asset maintains its value. But at the same time, they will have to make sure that people can access the housing market.” .

He said products like the Welcome Home program allowed people who paid rent equivalent to the service of a mortgage the ability to access the market.

“I want to go back to see if there are more things we can do to overcome that significant major hurdle from that first deposit.”

Ardern said the government had built more houses than any government since the 1970s, but the problem was that they were working from a low base.

“We are working very hard to overcome a crisis that has accumulated over several decades.”

Ardern said she didn’t want New Zealand home ownership to be determined by whether her parents, for example, can lend her a deposit or not. “That is not the New Zealand we believe in. That is why we are looking for progressive home ownership.”

She said that although interest rates have dropped significantly from the past, relative affordability was now a big issue.

Ardern said the previous focus had been on building large homes on large parcels of land and not on building affordable homes that first-time buyers need. The focus had now changed.

Alf Filipaina, Auckland Councilor for Manukau, said if landlords pass on the cost of rampant house price increases to renters, or see an opportunity to increase rents, less well-off families will be in trouble.

“Will that make people who are currently in rental accommodation [to have] leave? Then you will find, I think anyway, people who live in cars, “Filipaina said.

He said that because of the proportion of income spent on housing, the increases had significant effects on other areas of life.

“We’ll end up seeing families choosing between food on the table and paying rent. And I know right now they’d end up paying rent and looking at fast food because it’s cheap, and then we get into other trouble.”