Finance Minister Bill English has used a pre-Budget speech to underscore his warning the Government will act to curb rising house prices which represent a risk to New Zealand's economic recovery.
In a speech to the Wellington Employers' Chamber of Commerce ahead of the May 16 Budget, Mr English highlighted the risk posed by rising house prices and the resulting increase in debt levels.
His comments came as the Real Estate Institute reported the national median house price had reached a record of $400,000 driven by the Auckland market.
Prices in Auckland and in other growth markets were forecast to rise further from levels "already high by any international standard", he said.
Mr English said recent history showed periods of fast rising house prices could create instability for households and the financial system when prices eventually dropped.
"We will act where we can to reduce these risks following recommendations of the Productivity Commission last year."
Mr English said the Government remained on track to return the Crown's books to surplus by 2014/15 and was also targeting a reduction of net debt to 20 per cent of GDP by 2020.