MNI BRIEF: RBNZ Has "Bit Part" In Curbing House Prices: Orr

Reserve Bank of New Zealand Governor Adrian Orr on Tuesday said that NZ house prices are at unsustainable levels, but says the central bank only has a 'bit part' in controlling the issue.

In a speech on the property market, Orr said that using interest rates to target house price prices was not in the RBNZ mandate and "nor does it make sense." The central bank is expected to continue raising interest rates in the face of higher inflation, see: MNI STATE OF PLAY: RBNZ Hikes Rates, Signals More To Come

The RBNZ had limited ability to influence the housing market through macro-prudential measures such as loan to value rations, but the issue in NZ was largely one of housing supply. Orr said the RBNZ was consulting with commercial banks on additional "debt servicing ratio" tools which would impose a cap on a person's mortgage debt based on their income.

At a total value of NZD1.5 trillion, Orr said housing represented one half of the personal wealth of New Zealanders, and that current prices were unsustainable and "vulnerable to decline" and this created financial stability risks.