House prices remain stuck despite lower interest rates, giving first-home buyers a win, and leaving property owners gnashing their teeth.
Last week, the Reserve Bank cut its benchmark cash rate by 25 basis points to a three-year low of 3% and left the door open for further moves lower.
As a result, banks changed their interest rates, including cuts to variable home loan rates, fixed home loan rates and serious saver interest rates.
However, house prices remain low around the country, with only Christchurch and Queenstown showing modest rises. While, Wellington and Auckland saw sharp drops in prices.
Luxon said the government was focused on making housing become more affordable with wages growing faster than house price inflation.
“We don’t want our whole economic growth be driven by speculative house price inflation. We actually want it driven by productive growth,” he said.
Luxon said the market is now correcting from unsustainable house price jumps during the 2022 peak.
“We are going through a correction because 30% growth in a year was clearly a very unsustainable bubble – I think everyone understands that,” Luxon said.
Luxon then indicated that an announcement regarding the ban on foreign buyers to purchase houses in New Zealand will be coming shortly.
National proposed to allow foreigners to buy houses worth more than $2 million, contingent on a 15% tax. The proposal has been blocked by coalition partner NZ First, who wants the foreign buyers ban – which prevents most foreigners from purchasing existing houses – to remain in place, unchanged.
“We’ve had two parties in coalition that have had different perspectives on the foreign buyers ban. We will both have to make some compromises around that, but we will have more to say about that with in a few weeks,” Luxon said.
He is adamant a reversal of the ban will not fire up house prices again.
