Government urged to tread carefully on house prices
3:45PM Thursday May 03, 2007
A parliamentary committee was today urged to tread carefully when making decisions to try and combat the spiralling problem of housing affordability.
Figures presented to the commerce select committee showed the gap between wage earnings and house prices in New Zealand continued to increase and was outstripping other western countries.
However, Westpac chief economist Brendan O'Donovan said he expected the heat to disappear from the market over the next few years and warned the Government against taking drastic measures to try and influence the situation itself.
"Essentially our housing correction is a matter of when, not if," he said.
Mr O'Donovan said he was aware the Government was anxious to ensure home ownership was within reach to all New Zealanders but urged caution in terms of introducing subsidies for new buyers or disincentives for investors.
For every potential solution there were always consequences further down the line, he said.
"Be wary of people coming in with solutions, because there is no one solution, there is no silver bullet."
More
here .