Urgent government intervention needed to address housing supply shortage – economists

The government has been told it needs to take emergency measures to build new homes amid the severe shortage of property.

There are also calls for new policy settings to help cool New Zealanders’ thirst for real estate.

Data last week showed CoreLogic’s house price index jumped 2.6 percent in December, with the average property price hitting nearly $789,000 – eclipsing November’s record.

Economists do not expect house price gains to slow – or even flatten – for the foreseeable future.

Banks are offering record low mortgage rates – with Westpac the latest horse to bolt on Monday – targeting owner-occupiers with its latest reduced one-year loan rate of 2.29 percent.

Economists say low rates and poor supply is forcing the government to make some bold moves.

Cameron Bagrie from Bagrie Economics said the government needed to balance a strong economy versus a social conscience.

He said the Reserve Bank should be made to consider house price stability when setting policy for the economy.

“I’d probably put house prices back into the Reserve Bank’s remit – house prices were removed the last time around – I think that was a mistake.

“I’d be moving pretty quickly if they can to get that back into the remit sooner rather than later,” he said.