Adrian Orr: Housing matters

Speech by Mr Adrian Orr, Governor of the Reserve Bank of New Zealand, to the Property Council of New Zealand Retail Conference 2021, 2 November 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
16 December 2021

Tēnā koutou katoa.

Thank you for the opportunity to speak to you all today – it is very timely because tomorrow, 3 November, we will publish our latest Financial Stability Report. It will come as no surprise to you that in our Report we will again elaborate on why we view the level of house prices in New Zealand as unsustainable and why this poses financial stability risks.

Spoiler alert – today I will provide the gist of our analysis:

  • Why we at the Reserve Bank – Te Pūtea Matua must care about both the level of house prices and the concentration of housing in both household and bank balance sheets;
  • The drivers that continue to lead to volatile house prices; and,
  • What is being done to promote a more functional housing market and sustainable house prices.

At the source of the financial stability risk is the inability of housing supply to respond in a timely fashion to changes in demand, and the drivers that lead to a bias towards housing as an investment choice beyond simply a place to reside. Simple, but not easy, solutions to these issues are being implemented.