Bill English joins Reserve Bank in trying to scare housing market

 

Rising house prices can’t go on forever and the Reserve Bank could take action to rein in the booming market, Finance Minister Bill English says.

In a speech last week, Reserve Bank governor Graeme Wheeler warned about the risk a “sharp correction” to houses prices poses to financial stability.

Asked whether he thought housing bubble could burst, Mr English said: “All I know is no asset price can go up at over 10 per cent a year forever. Sometime it will stop.”

However, he said the Reserve Bank has responsibility for financial stability and it would be up to the governor to decide what action would be taken.

Mr English said housing supply was increasing and in the next three to five years the supply situation in Auckland will change.

“Of course we would have liked it to have been faster, but we’ve gone about as fast as we can,” he told reporters on Tuesday.

New Zealand has a strong influx of immigrants, it has cities that are refusing to ease up on regulations that will allow affordable housing, instead artificially forcing people into apartments, and we have a country that sees real estate as the only place to put money where some scumbag investor won’t screw you out of your life savings.

With inflation at 0%, and mortgages artificially high at 5+%, it isn’t any wonder that the demand for housing through people looking for homes as well as a place to invest isn’t cooling off.

Even the Reserve Bank Governor and the Finance Minister are now joining the team of doom-sayers saying this won’t last.

Well, there may be a correction. ?There may be a slowing down of growth. ?There may even be a small backward step, but nobody believes the NZ housing market, and especially the Auckland one, will crash. ?For that to happen, you either have to reduce demand or increase supply, neither of which is happening.

 

– NZN via 3 News

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