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Deputy Prime Minister Bill English is warning of a new house price bubble as interest rates remain below historic levels.
But he also says the government is unlikely to take interventionist measures such as rent controls or develop more public housing.
Mr English cites all the well-known causes for house price inflation – strangled land supply, red tape, higher building costs and the low cost of capital.
He made the comments in the introduction to the annual Demographia survey released this week which finds New Zealand prices are 5.3 times annual household earnings, slightly higher than last year's 5.2.
This compares with Australia at 5.6. Hong Kong rates most unaffordable at 13.5 times annual household earnings, with the UK at 5.12 and the United States at 3.1.
Houses in New Zealand are now nearly 80% expensive than the early 1990s, when the figure was 3 times annual household earnings.
Within New Zealand, Auckland is the least affordable market, with a median multiple of 6.7. Christchurch is 6.6, Tauranga-Western Bay of Plenty 5.9, Wellington 5.4 and Dunedin 5.1.
All were said to be “severely unaffordable”.
Read more details in the NBR NZPI report due out tomorrow.