New Zealand’s success in battling the coronavirus has unleashed an unanticipated problem: skyrocketing house prices.

When the pandemic hit, most experts predicted house prices would fall. Instead, prices have risen by more than 19 per cent over the past year, putting them out of reach for many people wanting to buy their first home.

The government, which has come under increasing criticism for its response to the housing squeeze, on Thursday announced the first of what it says will be a series of moves to address the issue by ordering the nation’s central bank to consider the impact on house prices when making decisions.

Reserve Bank Governor Adrian Orr said it welcomed the new directive, which is “in tune” with its own advice to the government. The central bank has also recently announced its own moves to restrict lending to housing investors.

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