English says house price rise unsurprising

Bill English

Household incomes have increased by a third in the last four years, while average house prices have risen nationally just 1.3% in the same period, making recent real estate market buoyancy unsurprising, Finance Minister Bill English says.

Appearing before parliament's finance and expenditure select committee today, Mr English appeared to have prepared the figures in advance for questions on the apparent heat in the Auckland housing market, which has seen average prices rise above the levels at the time of the global financial crisis in 2008.

"House prices on average have moved up one percent in nominal terms. Disposable income is up a lot over that period," he said. "We wouldn't be surprised to see a bit more interest going back into the housing market", especially with the lowest interest rates in 40 years.

Mr English tried to bat away opposition politicians who pressed him on forecasts from Treasury, the Reserve Bank and the International Monetary Fund of an unsustainably high current account deficit with the rest of the world over coming years.

He cited the Christchurch earthquake as adding around one percentage point to the forecasts, while expressing a personal opinion that the outlook for New Zealand was better than forecasters believe.

"I'm just a bit more optimistic," he said, since he doubted New Zealand would return to historic levels of debt accumulation. "The fact is we are in a world that's pretty different because everyone's reducing debt."

Households were saving more, which forecasters had originally doubted would happen, and New Zealand corporate balance sheets were stable.

Committed to a Budget surplus

While public debt was growing in part because of borrowing to cover quake rebuild costs and to lean against the impact of the global recession, the government remained committed to a Budget surplus by in the 2014-15 financial year.

If the current account deficit persisted at very high levels, New Zealand would also suffer a "textbook" sharp correction, with a much lower exchange rate among the outcomes.

Green Party leader Russel Norman challenged Mr English on this, asking why the government did not seek to manage the current account deficit down rather than wait for global financial markets to "punish" New Zealand.

Mr English said he was "unpersuaded" by the range of alternative policy options being proposed by opposition parties, saying all had been debated over the past 30 years and there was no substitute for continuing with economic reforms in areas such as land and water use, and the Resource Management Act, to foster faster economic growth.

"If we thought we could manage it, we would go and manage the damn thing," he said. The high kiwi dollar was a "signal from the world" that New Zealand had "sound prospects of producing stable yields compared to other countries".

"Our problem is one of success."

The economy would remain "patchy" and unpredictable. Growth in the first half of this year had been stronger than forecast and the second half was turning out to be weaker than anticipated.

"We think doing 2% to 3% annual growth we will continue to get job growth and continue to get household incomes into reasonable shape," Mr English said.


This article is tagged with the following keywords. Find out more about My Tags

Post Comment

13 Comments & Questions

Commenter icon key: Subscriber Verified

"Our problem is one of success," said Bill English.
This should be the joke of the year.
Tell this to all the unemployed, people who can only get part time work and all the young first-home buyers in Auckland.
Everything John and Bill have touched has turned to custard, from housing to education.
Bill English should be trying to fix the mess instead of all the claptrap we are hearing. The free market will not fix things while the tax system and other things distort the market.


3 questions.

1/ why are you unemployed? -you are able to move to where there is employment, e.g. Chch or start your own - in NZ its really easy to start your own.

2 why are you only part time employed? see Q1

3 do you HAVE to live in Auckland?

these questions all rely on some personal responsibility in getting an income.


"our problem is our success"???? Is this planet earth by chance? What part of this economy is doing well apart from the parts that should not be, the residential housing market and banking? Two years till next election. If the answering of questions and provision of strategy is so opaque now, commentary next november.will be glued to your seat stuff for sure, not.


gee Bill where is the success?
It sure isnt out here in the Provinces, things are tough out here.

Bill when were you last out here? did you listen to what you were being told? or is your head so full of spin you cant hear any more.

Auckland booms because of migration and immigration - look at that as the problem and then look for the odd solution around regional development.

oh no thats not 'free market' so that wont get a mention let alone consideration consideration from Bill

So crank the interest rates to control the house prices in Auckland, lift the dollar, tighten the scews on production in the Provinces. Increase the migration to Auckland the cure is the problem.


The real problem is we are relatively a very low wage economy and realestate investment and speculation still represents the best chance to get ahead for anyone with a house deposit in New Zealand.


What a load of tosh. Stats NZ data indicates 6.2% rise over 2008-12. Any quotable data source that varies far from this magnitude is surely not credible.

Scary that this man is in charge of the government's economic levers.



NZ is heading toward bankruptsy at an alarming rate of borrowing. Where is the success story? Needs glasses...


Some of you seem not to know what success is? Lok at the states, Spain, Greece , Portugal and you will see it.


Things are looking pretty shaky up top ... kiwi dollar about to implode?

Lots of canny dairy farmers (big guys) are selling up, what do they know?

Banks shipping $3.5 billion offshore every year can not be good for NZ inc., whatever way you look at it.


Does anyone else find Bill English's claim that household incomes have increased by 33% in four years slightly ridiculous??


High value mortgages are helping to kill the rest of the economy in favour of the banks. Houses are affordable when the average is three times median salary. That is the international norm. The consequence of Auckland being more than 6 times median salary is that borrowers spend much more of their income paying off bank loans and much less supporting other parts of the economy. Mortgagors are therefore much less wealthy. They have much less disposable income. That is why they will keep on de-leveraging and why less people will become homeowners. But, for the economy, there is not enough spare cash to lift business. It is NZ business versus the banks.

If we want the economy to avoid tanking, we must tank the housing market quickly over 6 months or let it drag out for 10 years while inflation deals to it. Either way mortgagor home-owners lose capital value.

It was mostly local government zoning restraints over many years that started us on this road. The credit binge just fuelled it more in the last decade with the whole industry taking advantage of many peoples ignorance of economic issues. Now that the mess is made by the industry and not constrained by government, they are wimping out of dealing with it. Talk about Nero fiddling while Rome burns. If ever there was an incentive to move offshore, this is a huge one. Who wants to spend much of their income giving it to the banks for 25 years while the rest of the economy struggles. Find a three times salary location and move there. Auckland is not liveable in the sense that it absorbs too much debt.


In answer to Sam - he must be talking about the household incomes of politicians and a handful of highly paid CEOs and company directors. For those who are self-employed (and the vast majority of wage earners I am guessing) it has been four years of going sideways in an economic environment completely lacking direction - not helped by a government completely devoid of ideas.


"Household incomes have increased by a third in the last four years" whos? mine hasn't.


Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot


Sym Price Change
USD 0.7740 -0.0003 -0.04%
AUD 0.9511 0.0005 0.05%
EUR 0.6324 -0.0002 -0.03%
GBP 0.4954 0.0001 0.02%
HKD 6.0039 0.0001 0.00%
JPY 92.5100 -0.0050 -0.01%


Commodity Price Change Time
Gold Index 1195.4 -2.890 2014-12-19T00:
Oil Brent 61.4 2.110 2014-12-19T00:
Oil Nymex 57.1 2.740 2014-12-19T00:
Silver Index 16.0 0.090 2014-12-19T00:


Symbol Open High Last %
NZX 50 5518.5 5545.0 5518.5 0.17%
NASDAQ 4752.6 4782.1 4748.4 0.36%
DAX 9901.3 9901.3 9811.1 -0.25%
DJI 17778.0 17874.0 17778.2 0.15%
FTSE 6466.0 6566.9 6466.0 1.23%
HKSE 23158.3 23189.6 22832.2 1.25%
NI225 17511.0 17621.4 17210.0 2.39%