John Key: Auckland property prices increasing "too rapidly"

John Key acknowedged today that Auckland property prices "are going up too rapidly".

John Key acknowledged that Auckland property prices "are going up too rapidly” in a press conference held today in Wellington, however he said this is not anything new.

“Three or four years ago, you were struggling to sell a house in Auckland,” and now there is a huge demand, Key said.

Key said this pattern is not unique to New Zealand.

"There are also very high price increases in Sydney and Melbourne.

“Things are never perfectly straight line in the house market.”

Key said the government thinks the primary response is on the supply side.

“Our major focus of attention is trying to get people into property, and particularly first home buyers.

“New capital gains tax is not something we are proposing.

“If you did do anything, you just want be really sure that you aren’t going to interrupt the supply which is starting to build up now in Auckland.

“Modest price increases are the right way forward. Large price increases can be destructive long term at the moment.”

The government is not looking at building more state houses, focusing instead on special housing areas.

Key said there are now 104 special housing areas, 90 of which have started preliminary work.

“14 have indicated that they are not progressing.”

Key said he believes those 14 special housing areas are in Auckland.

“If we don’t have any advice that they’ve started doing the preliminary work that they needed to do, they will probably find that in the next few days they will be getting a letter from Nick Smith saying that if they do not progress and bring those special housing areas onto the market, then the special area housing designation will be taken off them.”

Key denied that this was a letter of threat.

“We made it clear right from day one. If you want to to have a special housing area, it’s because we want you to speed up supply for the Auckland market, and for the other areas around the country that were designated.

“If you don’t fulfil that requirement, then you don’t need a special housing area and therefore we shouldn’t give you the benefits.”

Key said that the Reserve Bank is unlikely to raise inflation.

ENDS

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