PHOTO: How low will NZ house prices go? Image by rawpixel.com

The New Zealand government’s efforts to cool the country’s overheating housing market are likely to continue, according to one economist. After years of steady increases, house prices in New Zealand have surged in recent months, with some regions experiencing double-digit growth. The situation has led to concerns about affordability and the potential for a housing bubble.

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In response, the government has introduced a range of measures designed to curb demand and increase supply. These include changes to tax policy, increased funding for social and affordable housing, and the introduction of new regulations on property investors.

However, according to Tony Alexander, chief economist at BNZ, more interventions are likely to be necessary to maintain sustainable house prices in the long term. Speaking to Stuff.co.nz, Alexander said that the government’s current measures were “a good start,” but that more action was needed to address the root causes of the housing affordability crisis.

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Alexander pointed to a range of factors driving the current surge in house prices, including low interest rates, a lack of new housing supply, and strong demand from investors and homebuyers. He argued that the government needed to focus on increasing the supply of new homes, particularly in areas where demand was high, in order to bring prices back to more sustainable levels.

However, Alexander also acknowledged that increasing the supply of housing was a long-term solution that would take time to bear fruit. In the short term, he suggested that the government could introduce measures to discourage speculation and curb demand, such as further changes to tax policy or restrictions on foreign buyers.

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Overall, Alexander’s comments suggest that the government’s efforts to cool the housing market are likely to continue in the months and years ahead. While there may be no silver bullet solution to New Zealand’s housing affordability crisis, a combination of short-term interventions and long-term strategies could help to ensure that house prices remain at a sustainable level, allowing more New Zealanders to access the housing market.