Bill English MP
National Party Deputy Leader

15 January 2008

Labour sets record for housing unaffordability

National Party Finance spokesman Bill English says just as new records are being set for unaffordable housing, the worse news is that interest rates are set to remain higher for longer.

Recently the two year fixed rate has climbed to 9.6 per cent. Now, figures published in the Reserve Bank Bulletin, show payments on a 25-year mortgage of 90 per cent of the median national house price have reached a record high of almost 50 per cent of the average after-tax household income.

“Half of an average household’s income is now being spent repaying the mortgage, up from the long–term average of around a third. The rise in the past few years has been staggering. (*See graph below)

“Poorly targeted spending and overspending by Labour have helped keep interest rates higher for longer. With the credit card bills rolling in this January, householders won’t be thanking the Government for that.

“Today, NZIER says pessimism is on the rise. Meanwhile, yesterday’s Grant Thornton International Business Report says the gap in optimism between New Zealand and Australia ‘has widened considerably’. The difference is being described as ‘worrying’ and ‘disturbing’.

“Helen Clark promised to put New Zealand in the top half of the OECD by 2011. Instead we’ve gone back two places. This is what Labour’s so-called ‘economic transformation’ has delivered to working Kiwis.”

ENDS

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