NZ economy at risk from housing market
(26 October 2015 – New Zealand) The Auckland housing market remains a risk to the New Zealand economy, according to the country's Finance Minister Bill English.
"The longer it goes rising at 20 to 25 percent a year, the more of a risk it becomes," the minister told reporters this afternoon.
"You've got the median house prices about nine times the average income. That can't last."
English made the comments following a speech to a social housing conference in Wellington.
He said the Government would come under huge political pressure to provide assistance to middle-income families if interest rates rose.
"As households get a bit stretched in meeting the rising cost of housing, it inevitably creates pressure for government to lift the cash transfer programmes."
He said that in the mid-2000s, interest rates of 8 to 9 percent meant the Government had to compensate by making big increases in Working for Families subsidies and by introducing interest-free student loans.
English added that the Government would rather "get the market right" than have to provide more assistance to families.
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