9 June 2016

OCR: Households and businesses still held hostage to housing crisis

The National Government’s failure to fix the Auckland housing crisis continues to keep interest rates higher than they need to be, meaning families and businesses face higher than necessary costs of borrowing, the Green Party said today.

The Reserve Bank today left the Official Cash Rate unchanged at 2.25 percent despite economic conditions that favour lowering the rate, citing risks to the economy from high house prices and a lack of housing supply.

“National’s failure to fix the Auckland housing crisis is forcing the Reserve Bank to keep interest rates higher, hurting families, exporters, and jobs,” Green Party Co-leader James Shaw said.

“If National had tackled the Auckland housing crisis instead of choosing to do as little as possible, households and small businesses could be benefitting from lower interest rates right now.

“Higher than necessary interest rates are pushing the New Zealand dollar up, which hurts our exporters.

“We know what’s needed to start rebalancing the economy and fixing the Auckland housing crisis. National knows too, but is choosing not to act.

“Our country needs a capital gains tax (excluding the family home) to help rebalance investment and dampen property speculation, restrictions on overseas buyers to help slow demand, and a substantial government-led house building programme so all New Zealanders can afford a warm, dry home,” said Mr Shaw.

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