27 Jul 2016

Auckland house prices need to drop 50 percent - Greens

2:14 pm on 27 July 2016

Auckland house prices should be deliberately reduced by up to 50 percent over a period of time to make the market affordable again, Greens co-leader Metiria Turei says.

Sold sign outside a house in East Auckland

Photo: RNZ / Claire Eastham-Farrelly

The average house price in Auckland has risen to nearly $1 million, or 10 times the median household income.

Ms Turei said the only way to reverse that was to slowly bring prices back down to three or four times the median household income.

She told Morning Report the Green Party was considering what timeframe would work without crashing the market and hurting people who already owned homes.

"The only way to prevent a bust, and to protect families in the short and long term is to lay out a comprehensive plan, which means using every comprehensive tool that we've got so that we can slowly bring down house prices so that they're reasonable."

The Auckland Council's chief economist had suggested bringing prices down to five times the median household income by 2030, she said.

Labour leader Andrew Little said Ms Turei's declaration that Auckland house prices should be deliberately reduced was irresponsible.

There was no way a Labour-led government would consider the idea, he said.

"We have a very clear plan. It's not about crashing house prices. It's about stabilising prices.

"We don't want to cause undue economic harm to those who - in good faith - have bought homes, entered into mortgages. That's not a responsible approach."

Labour and the Greens recently struck a co-operation agreement, including a no-surprises policy.

Ms Turei said a more comprehensive capital gains tax, restricting property purchases to permanent residents and citizens, and removing tax exemptions were also needed to cool the property market.

Ms Turei said the government was not admitting there was a problem with housing prices, let alone putting in place a plan to deal with it to protect families.

Mr Little said a Labour-led government would build affordable housing, as outlined in recent policy announcements.

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