Source: NZN / 3 News
Prime Minister John Key is playing down findings of an OECD
report which rates New Zealand houses among the most expensive in
The paper published by Organisation for Economic Co-operation
and Development this month ranks New Zealand's house prices the
second worst in the developed world on a price-to-income ratio, and
the most overpriced on a price-to-rent ratio.
It says that relative to rents, New Zealand house prices are 70
percent too high.
Mr Key denied this proved the country's housing market was in
"If you look at what's driving the housing market in New
Zealand, it's a combination of factors. One is just buoyancy in the
overall economy and high levels of employment... that are
encouraging people to want to go into the housing market," he told
Radio New Zealand on Monday.
He said there was no indication this was going to slow.
"If anything, if you look at the Budget, it made it quite clear
there will be strong growth in the years ahead."
He tried to deflect the statistics by referring to house price
rises of 96 percent between 1999 and 2008 under the last Labour
Mr Key also said Auckland prices were still well below those in
cities such as London and Sydney.
The OECD report states New Zealand's house prices have had an
annual rise in real terms of 8.2 percent. Australia and the United
States were next closest, each with 6.6 per cent, followed by
Canada with 5.2 percent and Germany with 5.1 percent.
Labour MP Phil Twyford says right now, it takes almost half the
average wage to service the average mortgage - but that is set to
skyrocket in coming years.
"In five years' time that's projected to reach 63 percent, and
in Auckland a staggering 86 percent, of the average wage to service
the average mortgage," says Mr Twyford.
Housing Minister Nick Smith says the report shows there are "hard