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Politicians against housing market 'crash'

NZ NewswireNZ Newswire 5/07/2016
A general view of houses in a New Zealand suburb. © Getty Images A general view of houses in a New Zealand suburb.

Rather than deliberately crashing house prices, opposition parties say more affordable homes need to be built.

Former Reserve Bank chairman Arthur Grimes said on RNZ on Monday the government should deliberately crash prices in the Auckland market.

"Median house prices somewhere between $800,000 and $900,000 is way above most Aucklanders' possibilities of buying," he said.

"We do need the government to flood the market with housing."

Mr Grimes, now a research analyst, said prices needed to be crashed by at least 40 per cent to bring them back in line with where they were four years ago.

"And they were too high then, they were around $500,000," he said.

Prime Minister John Key thinks it's a crazy idea.

"Go and ask the average Aucklander with a mortgage with a bank whether they want to see 40 per cent of their equity disappear on a notion from an economist," he said.

Mr Key says what's needed in Auckland, and the rest of New Zealand where there is high growth, is a sustainable housing supply to meet demand.

Both Labour leader Andrew Little and Green Party co-leader James Shaw says it's not a shock that's needed, but more affordable housing.

"What we do need to see is affordable housing added to the housing stock, which is not there at the moment," Mr Little said.

Mr Shaw said the "steam" needs to be taken out of the housing market and that more homes need to be available at the lower end of the market.

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