Don’t bet on house prices rising faster than incomes

Former Reserve Bank Governor and National Party leader Don Brash says there are grounds for believing that house prices may finally have ended the three-decade period when they rose significantly faster than incomes.

He says the far-reaching policy changes the coalition government is undertaking have the clear intention of preventing further house price escalation.

These changes include obliging local authorities to zone housing sufficient housing land for the estimated need over the next three decades; removing the restriction on building small “granny flats”; allowing for greater intensification around transport nodes; freeing up the rules and regulations arising from the Resource Management Act; and reducing some of the rules and regulations which currently make house-building such a constipated process.

“If the Government is serious about these policy changes – and Chris Bishop, Chris Penk and Simon Court certainly seem to be – it would be unwise to make a substantial bet on house prices continuing to rise faster than incomes, as they have done over the past 30 years,” Brash says.