New Zealand's National Party leader and Prime Minister-elect John Key celebrates a landslide victory at the National election party during New Zealand's general election in Auckland September 20, 2014.
New Zealand's National Party leader and Prime Minister-elect John Key celebrates a landslide victory at the National election party during New Zealand's general election in Auckland September 20, 2014. Reuters/Nigel Marple

New Zealand Prime Minister John Key admitted house prices in Auckland are rising “too rapidly.” In a press conference recently held in Wellington, the prime minister said increasing prices are not new.

Mr Key said people were struggling to sell houses in Auckland three or four years ago but now there is high demand. He remarked that this is not unique to New Zealand since house prices are also rising Australian key cities like Sydney and Melbourne.

The prime minister believes the primary response should be on the supply side. He said the Auckland housing market is not overvalued which prompted the Labour party to remark that he needs to be “less relaxed” about what economists believe is a housing crisis.

Mr Key told Radio New Zealand that there’s a general view of housing prices not being overvalued in relation to different factors. However, Labour housing spokesperson Phil Twyford said the prime minister is in “deep denial” about the surging house prices.

“John Key is deep in denial. He must be one of the only people left who are not concerned about the risk of the market going bust and causing immense human and economic damage,” said Twyford. The Labour spokesperson added that Mr Key thinks Auckland’s increase in house prices was the result of market forces at work. He critcised the prime minister for applying currency trading logic to the crisis.

TVNZ said the national government and the Reserve Bank of New Zealand had disagreed about the causes of the crisis. The government had insisted supply was the cause of upsurge.

Twyford said while the Reserve Bank is pushing for new solutions to crack down on speculators in the housing market, it is time for Mr Key to be not so relaxed about the situation. The government is focusing more on building special housing areas instead of state houses.

A special housing area is a specific zone set up to encourage the construction of new homes with less red tape than the usual process. Mr Key said about 104 areas had been marked for special housing areas and 90 of them have begun preliminary work.

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