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NZ needs economy built on more than just speculation

Grant Robertson
MP for Wellington Central
Finance Spokesperson

MEDIA STATEMENT


19 October 2016

NZ needs economy built on more than just speculation

The ballooning and unsustainable value of the country’s housing stock points to everything that is wrong with National’s economic management and the desperate need to invest in productivity and innovation, says Labour’s finance spokesperson Grant Robertson.

“The latest numbers released by the Reserve Bank are breathtaking. Each month the value of the housing stock grew by $18.1bn – just short of the $20.8bn GDP produced by the country each month in the past year.

“Houses were worth 381 per cent of GDP at the end of June. That outstrips both the US (peaking at 210 per cent) and Australia (currently 352 per cent) who are both known to have had risky housing bubbles.

“It’s little wonder the Reserve Bank Governor hardly gives a speech these days without warning of the risks to the stability of the economy from the out of control housing market.

“In order for New Zealanders to have decent work with higher wages we need an economy built on investment in improving productivity, increasing skills and backing innovation. At the moment economic growth is built on the shifting sands of housing speculation and rapidly rising debt."

“Housing values rose $138.5bn in the last year. The country’s stock market is worth only $118bn by contrast.

“It is unsurprising household debt has hit a new high at 165 per cent of GDP, fuelled by speculation in the housing market. With Auckland houses at a million dollar average Kiwi families are mortgaging themselves to the hilt in order to get a toehold in the market. According to the ANZ households are now borrowing $8bn a year more than they are saving.

“It doesn’t have to be this way. National has chosen to allow real estate speculation to dominate the economy. Labour would squeeze the speculators out of the market, launch a massive government-backed home building programme, and support businesses that generate real wealth and jobs,” says Grant Robertson.

ends

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