ORC cut welcomed but overdue

The Green Party welcomed today’s cut in the Official Cash Rate (OCR) but restated that the Government’s failure to take the heat out of the Auckland housing market meant risks remained for further house price increases.

The Reserve Bank today reduced the OCR by 25 basis points to 2.25 percent.

“We welcome the long overdue decision to lower the OCR which will be a relief to indebted dairy farmers and households paying off their mortgages,” Green Party finance spokesperson Julie Anne Genter said.

“For months the Governor has had to keep the Official Cash Rate higher than needed due to the National Government’s ongoing failure to address the housing crisis in Auckland.

“National needs to be working in tandem with the Reserve Bank by introducing complementary measures that will contain house price inflation instead of leaving it all up to the Reserve Bank to manage.

“New Zealand households and businesses will benefit from interest rate cuts, but lower rates will mean higher risks of house prices inflating further.

“The responsible policy would be a comprehensive capital gains tax (excluding the family home) to remove the unfair tax incentive to invest in property. Treasury has been telling the Government this has been needed since 2010.

“If the Government is serious about dealing with Auckland housing supply constraints, they should be building more homes in walkable neighbourhoods and supplying more frequent public transport. Blaming the RMA for a lack of supply is a red herring.

“By addressing the Auckland housing affordability crisis, we can safely reduce the cost of borrowing to help businesses and all those with mortgages or looking to get into their first home,” Ms Genter said.

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