National leader Christopher Luxon with 7 properties 'wouldn't want to see house prices fall dramatically'

National's new leader Chris Luxon, who owns seven properties, "wouldn't want to see house prices fall dramatically" but recognises prices need to "stabilise". 

His comments came after released new figures showing a big increase in the number of homes for sale. There were 19,260 houses on the site in November, an annual increase of 5.1 percent.

But while that's good news for first-home buyers, house prices have continued to rise. The national average asking price rose 3.4 percent to a record $969,604 in November, from the previous month.

Recent figures from Quotable Value showed a jump of 60.4 percent in average residential house values across Wellington since 2018. Every suburb in the capital is now worth more than $1 million. 

"The reality is that we first of all need to free-up consenting and build more houses. That requires some expansion, it's going to require some intensification in our cities," Luxon told The AM Show on Wednesday.

"As you see interest rates start to rise, I think over the middle of next year, you will start to see house prices stabilise and maybe even fall for a bit.

"But at the end of the day, we've really got to free-up and build more houses. That's really the supply-driven issue and that's really what's got to happen."

The latest Ipsos New Zealand Issues Monitor research showed housing is the top issue facing New Zealanders despite the COVID-19 pandemic and Labour is the most trusted party to solve it - but their support is dropping. 

In November 2020, 47 percent of Kiwis believed that Labour was the most capable to manage the housing crisis, according to Ipsos, but by October 2021 it dropped to 32 percent, compared to National on 23 percent. 

National leader Christopher Luxon and deputy leader Nicola Willis.
National leader Christopher Luxon and deputy leader Nicola Willis. Photo credit: Getty Images

However, under Labour, housing consents have reached record heights. In the year to October, 47,715 new homes were consented, up 26 percent.

Housing Minister Megan Woods announced on Tuesday that 2938 transitional housing spaces had been delivered by Labour since it came to power. But not all of them were new houses - of the latest 1000, 70 percent were newly constructed homes.

Both Prime Minister Jacinda Ardern and Finance Minister Grant Robertson, mindful that many Kiwis are banking on capital gains to fund their retirements, have said they don't want to see house prices come down - even as fewer and fewer Kiwis are able to afford them. 

Luxon, who owns seven properties, had a similar position. 

"I wouldn't want to see house prices fall dramatically, but there might be a period of time where house prices do come back, as there has been over the last 30 years. That's purely because of what's happening in the market and it's about supply and demand," he told The AM Show. 

"What we really need to do is stabilise house prices, build more houses and actually at the same time, work very hard on building a much more productive economy that drives higher incomes."

ASB Bank said on Wednesday it expects house prices will fall in the second half of 2022 as supply meets demand, interest rates increase and credit conditions tighten.

Solving the housing crisis

With house prices shaping up to be a major political challenge for Labour after its re-election last year, the Government announced a suite of policies in March to try and help first-home buyers into the market.

The Government tweaked income caps for state deposit assistance and launched a $3.7 billion fund to pay for housing infrastructure. And in a controversial move, tax deductions on interest costs for rental properties were removed, after it was revealed investors made up the biggest share of buyers in the housing market. 

Despite owning four investment properties - the others are a home, a bach and an apartment in Wellington - Luxon denies contributing to the housing crisis.

"No, I think that's unfair," he told RNZ's Kim Hill, who told him: "I presume you can't live in all of them at the same time."

"That is part of my decision and my investment and my personal affairs," Luxon said. 

"What I can tell you is that we need to get moving with building houses and opening things up. We've got a country the size of Japan and the UK with more population in those places and we've got more expensive house prices."

He said while it's a "complex" issue, "You really have to look into how to unlock the infrastructure that supports the development of those houses, all those sorts of things."

Luxon's deputy is National's housing spokesperson Nicola Willis, who in October helped orchestrate a rare display of unity with Labour to help solve the housing crisis, by forcing councils to build up in urban areas and allow more subdivisions.

National's traditional support partner ACT is not on board, but Luxon said National "entered that in good faith". 

Luxon said National will listen to feedback from local government and experts on what changes could be made. 

"We will digest that feedback. We want to make some amendments to the Bill and we'll be talking with the Government about that, because I think if they can come on board with those amendments, great, but if not we'll revisit it."