Minister for Housing Advocates for Lower House Prices Despite Potential Homeowner Concerns

Date Published: 20 June 2024

Key Facts

• Housing Minister Chris Bishop advocates for a reduction in average house prices, which he regards as too high.
• Bishop’s stance is unusual among New Zealand politicians, who have typically resisted calls for significant price drops.
• Price hikes have locked many prospective new buyers out of the market.
• New Zealand house prices rose faster than in any other OECD country over the last 20 years.
• Price corrections are underway, but prices remain above pre-pandemic levels.

Article Summary

Housing Minister Chris Bishop has publicly called for a reduction in New Zealand’s average house prices, stating that they are currently too expensive. His comments represent a significant departure from the usual rhetoric of New Zealand politicians, who have traditionally been cautious about advocating for house price decreases. Bishop believes that lowering housing costs will make properties more accessible to those currently priced out of the market, even if it causes concern among existing homeowners worried about their property values.

Bishop underscored the difficulty many new buyers face, partly due to high prices and Reserve Bank loan-to-value ratio restrictions. He mentioned that an entire generation had been locked out of homeownership because prices were allowed to climb too high. He also noted that while current homeowners might be anxious about declining property prices, reducing these prices is crucial for providing opportunities to younger people, including their own children.

Over the past two decades, New Zealand’s house prices have increased faster than in any other OECD country. Bishop declared that his government is determined to improve housing affordability and prevent further unsustainable price rises. He sees this as a core mission and is willing to disrupt the status quo to achieve it.

Recent statistics indicate that while house prices have fallen by over 16% from their 2021 peak, they still remain 25% above pre-pandemic levels. Despite some improvements in affordability, expert forecasts suggest that it will take a combination of continued house price stabilization and significant household income growth to fully restore housing affordability to pre-Covid-19 levels.

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