By Alex Tarrant
The Prime Minister is welcoming the Productivity Commission's move to investigate whether a 100% rise in house prices over the last decade hurt New Zealand's productivity and economic capacity.
Finance Minister Bill English announced the commission's first tasks last week, which also include an investigation into international freight costs due to New Zealand's reliance on exporting. For more see last week's article here [5].
“Housing affordability is a critical issue in New Zealand. We see New Zealand cities constantly being at the high end of that affordability index," Key told journalists on Monday afternoon.
"It’s important that people can house themselves and not consume all of their disposable income doing so. I think it’s right for the Productivity Commission to have that as one of their initial focuses,” Key said at his regular post-cabinet press conferrence.
There had been a lot of work done on the issue over the years before the current government entered power.
"The previous government had DPMC (Department of Prime Minister and Cabinet) lead the effort in terms of looking at those issues," Key said.
"There’s a lot of different factors – we’ve addressed some of them, I think, in terms of reforms we’re making to the Building Act, [and] we’ve done in terms of the Resource Management Act. There are other areas we’ve been addressing that," he said.
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"Obviously housing is a lot more affordable at the moment under this government than it was under the previous government, simply because interest rates are a lot lower, and actually house prices are not rising. If anything, they’re static to slightly negative."
Government was not looking at any more tax changes to the housing and housing investment area.
The REINZ median house sale price in New Zealand rose 102% to NZ$350,000 between February 2001 and 2011, while the Consumer Price Index, a measure of general price rises across the economy, rose 31% over that time.
The Productivity Commission was established as part of the National Party's coalition agreement with the Act Party.