The National Government’s failure to address the housing crisis is leading to dire warnings from ratings agency Standard and Poor’s about the impact on the strength of the economy and New Zealand banks, says Labour’s Finance spokesperson Grant Robertson.
“Standard & Poor’s analyst Nico DeLange has warned of the consequences that a sharp correction in house prices would have on the financial sector. Mr DeLange said: ‘If it were to occur - with about 56% of registered banks' lending assets secured by residential home loans - the impact on banks would be amplified by the economy's external weaknesses, particularly its persistent current account deficits and high level of external debt’.
“He also raised concerns about population growth and the lack of housing supply reducing the impact of the Reserve Bank’s use of macroprudential tools to rein in the housing market.
“This is a serious warning from a reputable source. The Government has refused to listen to any number of warnings from banks, the Reserve Bank and even the Treasury. They are out of touch and out of ideas.
“Only Labour’s comprehensive housing plan of building thousands of affordable homes, establishing an Affordable Housing Authority to get developments done, and clamp down on speculators will fix the housing crisis,” says Grant Robertson.