Saturday, 09 December 2023
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDRIVEN Car GuideThe CountryPhoto SalesiHeart RadioRestaurant Hub
Voyager 2023 media awards
Subscribe
Advertisement
Advertise with NZME.
Home / Business

John Key says call to crash house prices by 40pc is 'crazy'

NZ Herald
4 Jul, 2016 05:58 AM2 mins to read
Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail
Arthur Grimes, a senior fellow at Motu Research and an associate professor at Victoria University says drastic action is needed in the Auckland housing market. Photo / Stephen A'Court

Arthur Grimes, a senior fellow at Motu Research and an associate professor at Victoria University says drastic action is needed in the Auckland housing market. Photo / Stephen A'Court

A call by a former Reserve Bank chief economist to flood Auckland with new houses to crash house prices by 40 per cent is "crazy", Prime Minister John Key says.

As reported in the Herald's Weekend Business, Arthur Grimes, who is now senior fellow at Motu Research and an associate professor at Victoria University, said drastic action was needed.

REINZ data shows Auckland's median house price reached $820,000 in March this year - a 66 per cent increase in only four years, Grimes noted.

The Government should try and cause a 40 per cent crash in house prices to bring Auckland's median back to about $500,000.

Advertisement
Advertise with NZME.

Grimes, who was Reserve Bank chairman from 2003-2013, said one way to bring down prices would be to build an extra 150,000 houses over six years.

Key was asked about the proposal at his weekly post-Cabinet press conference today.

"I think it is crazy. Go and ask the average Aucklander who has got a mortgage with a bank if they want to see 40 per cent of their equity disappear," he said.

"What Auckland and the rest of New Zealand needs, where it is in high growth, is sustainable supply of housing to meet the demand.

Advertisement
Advertise with NZME.

"Actually destroying people's equity is not what this government is about ... it would leave an enormous amount of people who have just entered into the market with huge losses, and put enormous pressure on developers, that would put pressure on some of the banks."

Key said building 150,000 houses was unrealistic, given the current construction rate of about 9000 a year.

The Prime Minister - who has recently used the term "housing boom" instead of the "housing crisis" favoured by opposition parties - yesterday launched new housing policy, including a $1 billion infrastructure fund.

Related articles

New Zealand|Politics

Key to meet departing British PM

04 Jul 05:00 PM
Business

Average Auckland house price to hit $1m

05 Jul 12:00 AM
Business

Fran O'Sullivan: Why won't Key act on housing?

05 Jul 05:00 PM
Saveshare

Share this article

facebookcopy linktwitterlinkedinredditemail
Advertisement
Advertise with NZME.

Latest from Business

Premium
Business

‘Unusual convoy’: The mission to retrieve 900,000 banknotes from north Gaza

08 Dec 07:20 AM
Premium
Business

Market close: SkyCity Entertainment shares fall after firm revises its guidance

08 Dec 05:13 AM
Premium
Business

Netflix builds a Squid Game universe as it awaits a second season

08 Dec 05:00 AM
Premium
Business

Moody’s advised staff to stay home ahead of China outlook cut

08 Dec 03:13 AM

More houses coming

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Premium
‘Unusual convoy’: The mission to retrieve 900,000 banknotes from north Gaza

‘Unusual convoy’: The mission to retrieve 900,000 banknotes from north Gaza

08 Dec 07:20 AM

Financial Times: A Bank of Palestine operation managed to move notes worth $81m.

Premium
Market close: SkyCity Entertainment shares fall after firm revises its guidance

Market close: SkyCity Entertainment shares fall after firm revises its guidance

08 Dec 05:13 AM
Premium
Netflix builds a Squid Game universe as it awaits a second season

Netflix builds a Squid Game universe as it awaits a second season

08 Dec 05:00 AM
Premium
Moody’s advised staff to stay home ahead of China outlook cut

Moody’s advised staff to stay home ahead of China outlook cut

08 Dec 03:13 AM
Kiwi’s business dream a global winner
sponsored

Kiwi’s business dream a global winner

About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2023 NZME Publishing Limited
TOP