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Aucklanders' debt worries Wheeler

NZ NewswireNZ Newswire 9/06/2016
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Reserve Bank governor Graeme Wheeler is worried about house price inflation in Auckland and the debt that's being racked up by those who live there.

He told parliament's finance and expenditure committee on Thursday it was "particularly worrying" that Auckland's house price to income ratio was nine, while in the rest of the country was 5.2.

That meant Auckland's ratio was 70 per cent higher than the rest of the country.

"The other thing that's a worry is that if you look at household debt to income, the ratio is about 162 per cent," Dr Wheeler said.

He said he didn't have regional data.

"Given the fact that household incomes in Auckland aren't that much different to the rest of the country, and given that the house price to income ratio is nine, my guess is that if you did have that data the debt to income ratio for Auckland would be well above 160 per cent," he said.

Earlier on Thursday, Dr Wheeler kept the official cash rate at 2.5 per cent, partly because he doesn't want to risk another burst of house price inflation.

He told the committee the low interest rates were one of the things driving house price inflation, and he didn't think they were likely to rise in the foreseeable future.

"On the supply side, in essence we just need a lot more housing," he said.

"Building consents in Auckland are the strongest in 11 years, roughly 12 per cent above last year, but it's not enough just to cover net migration flows."

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