Clayton Cosgrove Media Statement
Member of Parliament for Waimakariri

COSGROVE URGES RESTRAINT IN GOVERNMENT SPENDING

Falling median property prices and rising interest rates are putting some homeowners at risk of negative equity if the trend is fuelled by excessive inflationary pressures says Waimakariri MP, Clayton Cosgrove.

The best short term help the Government could offer is to stick to the restrained spending plans they had already developed and ignore the “wish lists” flooding in from state servants.

“The best thing we can do for home owners at present is not give the banks any more excuses to raise their interest rates,” said Mr Cosgrove.

The recent trend for falling median property prices coupled with rising interest rates meant that highly geared homeowners were at risk of finding their slender equity in their homes reversed into negative equity.

The median house price in the Canterbury region fell in December to $140,000 compared to $143,000 recorded in December 1998. The Canterbury fall reflected a national trend for declining median house prices.

Mr Cosgrove, who sits on Parliament’s powerful Finance and Expenditure Select Committee said that the pressure for major spending increases was coming from government departments who were putting forward ‘best case” spending proposals as part of the traditional testing of a new Government by their bureaucracy.

“Frankly, there seems to be quite a few Sir Humphries under the delusion that its Christmas for all their pet schemes and aspirations,” said Mr Cosgrove.

After years of ritual under-funding and spending cuts under National-led governments the temptation to try and repair the damage quickly would prove enormous, but had to be withstood. New Zealanders still had a tendency to expect levels of equity appreciation on their homes that were only attainable back in the days of high inflation.

Mr Cosgrove said he was particularly concerned for the new homeowners in Waimakariri where building consents had turned out to outstrip projections last year.

For new homeowners the slight movements in interest rates lately had an impact that people in established homes could not always appreciate.

ENDS

For further information contact:
Clayton Cosgrove
MP for Waimakariri (04) 470 6593
(03) 327 7737
(025) 829 562

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