“Four months ago ACT suggested the Reserve Bank should be made to use monetary policy to impact house price inflation and today the Government agreed,” says ACT Housing spokesperson Brooke van Velden.
“ACT led this debate, followed by the National Party and now finally Labour is on board.
“And while today’s move is pleasing, we accept the Governor doesn’t have an easy task.
“He said as much in his back and forth correspondence with the Finance Minister in recent months, noting a direction like today’s ‘could make monetary policy less effective and impact financial market efficiency.’
“ACT says much of that actually depends on the performance of the Government, in particular its ability to vastly improve the supply of new houses.
“That is really the only way to have significant impact on house price inflation, which just this week Core Logic, Demographia and the NZ Initiative have highlighted is at record levels.
“Unfortunately the Finance Minister’s head-space is still one of dampening demand, as evidenced by his direction to the bank today.
“The NZ Initiative made clear this week that demand side measures had been a failure – the key to easing market pressure was and always has been supply.
“It's clear that after three years of not doing very much at all Grant Robertson is trying to make this the Reserve Bank’s problem.
“He’s going to find it’s far from that simple and will have to come up with some pretty startling supply-side solutions in the coming weeks if his Government is going to have any credibility on housing whatsoever.”
ENDS