6 Jul 2016

Housing 'challenge' still not a 'crisis'

5:12 pm on 6 July 2016

Prime Minister John Key has been challenged about why he was willing to talk about a housing crisis in 2007, but not now when prices have since almost doubled.

Prime Minister John Key talking to media outside Rainbows End. 16 June 2016.

In 2007, Mr Key said there was a severe home ownership and affordability crisis in New Zealand. Photo: RNZ / Claire Eastham-Farrelly

The government acknowledges housing affordability is a challenge but refuses to say it is a crisis.

That is despite figures showing prices rising at their fastest rate in 12 years, and the average price in Auckland hitting nearly $1 million.

The latest government housing initiative is a $1 billion infrastructure fund for councils facing high housing demand.

The government said it was part of a "comprehensive" plan to counter the "challenge" of housing affordability.

In Parliament this afternoon, Green Party co-leader James Shaw asked Mr Key to respond to a comment he made in his second year as the National Party's leader.

"Does he agree with the statement made by the leader of the National Party in 2007 that 'we are facing a severe home ownership and affordability crisis'?'"

Mr Key said it would be "pretty awkward" if he did not agree with himself.

"The answer to that question is yes, because the complete mismanagement of the previous Labour government saw interest rates go to 11 percent so of course it was having a huge impact on affordability," he told the house.

Mr Shaw then asked Mr Key to reconcile his past statements with the government's current position.

"Can he explain why an average Auckland house price of $493,000 back in 2007 was a 'severe crisis' but today's average Auckland house price of $975,000 somehow isn't?"

In response, Mr Key said at the time houses prices had almost doubled, and interest rates were "extremely high".

After a series of questions, Mr Key hit back at Mr Shaw, saying the Greens should put their money where their mouth is.

"And if the Greens wanted to support us on RMA [Resource Management Act] reform, to allow us to release that land even quicker, we could do that.

"So what the member does is parade on TV like he cares about New Zealanders, but he cares so little he's not prepared to change the law - he can keep smiling but why doesn't he do something about it?"

Mr Key has also said this week he expected the Reserve Bank to crack down further on investors in the residential market - with new measures that may well be outlined in a speech by Reserve Bank deputy governor Grant Spencer tomorrow afternoon.

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