Jacinda Ardern’s 2017 election promise to fix New Zealand’s housing affordability crisis has been put to the sword by the Reserve Bank of New Zealand (RBNZ), which has tipped 22% house price inflation in its latest Statement on Monetary Policy, which was released yesterday.
The next chart shows the RBNZ’s projection, with New Zealand house prices tipped to experience their strongest growth since 2003:
House price gains over 2020 reflected a variety of demand factors, in the face of significant impediments to housing supply… High inward migration prior to border restrictions being implemented is likely to have contributed significantly to the increase in house prices… In addition, lower interest rates and the removal of LVR restrictions have made mortgages cheaper and more accessible for homebuyers, contributing to stronger demand. The resilient labour market has also been playing a supporting role, helping to underpin home loan serviceability.
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Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
