Key in crisis mode over housing bubble

John Key’s call for tougher lending controls for property speculators again demonstrates a Government in crisis mode over the hugely damaging housing price bubble, the Green Party said today.

Prime Minister John Key yesterday signaled to the Reserve Bank that it should quickly extend existing loan-to-value ratio restrictions to investors to help slow house price rises. The latest monthly QV House Price Index shows values nationwide are now rising at the fastest rate since 2004, with the average house value in the Auckland region closing in on a million dollars.

“National’s failure to show strong economic leadership in the housing market has resulted in an Auckland housing bubble that risks doing serious damage to the whole economy,” said Green Party finance spokesperson Julie Anne Genter.

“A strong rise in the New Zealand dollar as a result of the housing bubble is hurting the productive part of the economy — the export and manufacturing sectors — which enable us to earn our way in the world.

“New Zealand’s export sector is being sacrificed to protect speculators.

“John Key has for too long believed that debt-fuelled property speculation is a ‘sign of success’ and not a deep, structural economic problem that requires a significant response.

“National’s tinkering with the housing market is a clear sign of a Government in trouble.

“The only way to fix the Auckland housing crisis is to change the Government.

“The Green Party in government would level the investment playing field by introducing a comprehensive capital gains tax (excluding the family home) and undertake a major state-funded house build to bring down property prices to more affordable levels,” said Ms Genter.

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