PM: Prices can’t keep rising like this

Prime Minister Jacinda Ardern says she wants to ensure first-home buyers can get into the market after new property data showed house prices have risen nearly 20 per cent.

They have increased 19.8 per cent year-on-year with the median now at $725,000. The wider Auckland region’s median hit $1 million for the first time, up from $860,000.

“Obviously we want to ensure our first-home buyers can get into the market, that is something that is top of mind for us,” Ardern said.

“It just cannot keep increasing at the rate that it is.”

She didn’t want home ownership to be determined by whether your parents could lend you a deposit.

“That’s not the New Zealand we believe in. That’s why we are looking at progressive home ownership.”

Although interest rates were down significantly from the past, relative affordability was now a huge issue, she said.

The focus had changed from building large houses on large plots to building affordable homes that first-time buyers need.

Alf Filipaina, Auckland councillor for Manukau, said if landlords pass on the cost of rampant house price rises to renters — or see a chance to raise rents — less well-off families will be in strife. “We’ll end up looking at families choosing between food on the table and paying their rent. And I know at the moment they would end up paying their rent, and looking at fast food because it’s cheap, and then we get into other issues.” Real Estate Institute chief executive Bindi Norwell said: “October will go down in housing history as being the point in time when Auckland region’s median house price hit the million-dollar mark for the first time — something no one anticipated or expected just six months after the entire country came out of lockdown.” Economists had forecast prices to fall 6 to 9 per cent by either December or next March.

Auckland city’s median is $1,200,000, Manukau’s $1m and the North Shore’s $1.15m.

Norwell worried about Auckland prices: “While this is a significant milestone, it raises serious questions around future affordability for Auckland residents wanting to get a foot on the property ladder.”

Act party leader David Seymour has taken aim at Reserve Bank governor Adrian Orr and said the country was monetising its debt, avoiding hard choices and instead giving itself artificially low interest rates.

Ardern says with the mandate the Reserve Bank already has it is using tools that will likely affect the housing market. “They have the ability through the LVR [loan-to-value ratio] regime to target specifically that end of the market,” she said.

“First-time buyers will equally be aided by the fact that we have historically low interest rates. But [that] is also causing potential for heat in the market for others who are looking to buy, which is why the Reserve Bank is looking specifically at [the way] LVRs are used . . . they are consulting on that now, and [it] will potentially make a difference.” —