Twyford Phil: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeTwyford Phil: Oral Questions — Questions to Ministers[Sitting date: 25 February 2015. Volume:703;Page:1902. Text is incorporated into the Bound Volume.]7.PHIL TWYFORD (Labour—Te Atatū) to the Minister for Building and Housing: Does he agree with KPMG that banks are warning that the “significant deals done at ridiculous pricing” for New Zealand land and property could spell disaster for them?Hon BILL ENGLISH (Deputy Prime Minister) on behalf of theMinister for Building and Housing: On the face of it no I do not actually agree with KPMG although I am not exactly sure what it means. If banks feel that they are lending money on “significant deals done at ridiculous pricing” then they should not be and it would be their own fault if it led to disaster. But in fact they are subject to a fairly detailed supervisory regime that is intended to ensure that they do not take significant risks at ridiculous pricing in their lending.Phil Twyford: Does he agree with KPMG that “ ‘The risk for New Zealand is that while all this money comes flooding in and creates over inflated prices New Zealanders are forced to buy at these over inflated prices.’ That was leading to a sense of hopelessness among some young people about ever owning a home.”; if so why will he not do something about that flood instead of just tinkering with the Resource Management Act and selling off State houses?Hon BILL ENGLISH: KPMG has not produced much evidence to back up the statement that there is “a flood of investment”. You do not have to go too far though to find a young couple who do find it a struggle to buy their first home particularly in Auckland. They can buy them a lot more easily in other centres. That is why the Government is focusing strongly and increasingly successfully on improving the flexibility of supply of land the reduction of consenting costs and the reduction of building costs so that we can have more affordable homes particularly for low and middle income earners who have actually had a problem for quite a while and it is good that the member has now noticed.Phil Twyford: What is he doing about the pressures of offshore speculators driving the price of housing out of the reach of young first-home buyers and creating a risk to the whole economy?Hon BILL ENGLISH: We are doing what we have described many times in this House and that is as a top priority focusing on expanding the supply of land and the more ready availability of low and moderate value homes particularly in the Auckland market which we are doing through special housing areas. We will have the opportunity to do this through more rapid development of the State housing areas in Auckland. We are getting good cooperation from the Auckland Council. As indicated by the number of consents we are starting to make some real progress but there is a lot more to do.Phil Twyford: I raise a point of order Mr Speaker. My question asked what the Government is doing about the pressures of offshore speculators. That was not addressed in the answer.Mr SPEAKER: Order! It was. The Minister then went on and said exactly what the Government is doing. Whether or not that in the member’s mind is a satisfactory answer clearly the question was addressed.Phil Twyford: Now that the banks and KPMG say that offshore speculators are a problem and now that Tony Abbott’s centre-right Government in Australia has announced a tax on foreign buyers a register of foreign property ownership and tough penalties for those who break the law will he reconsider his policy or is this just another case of him being right and everyone else being wrong?Hon BILL ENGLISH: No it is a case of focusing on the highest priority the issue that will make the biggest difference. The fact is that in Australia the work being done to put together a foreign buying register has had absolutely no impact on house prices in their main cities whereasactually the underlying issue is supply. That is why we continue to focus on it. You can of course make some adjustments to demand but it is the case that in a strong economy where incomes are rising and interest rates are at 50-year lows people are willing to pay more for houses. In that respect it is a sign of success.Phil Twyford: Is it a sign of success when the ASB Bank says that Auckland house prices are now “a critical financial stability issue” meaning that people’s debt levels are getting too high to handle a fall in house prices and the Reserve Bank warns of a sharp correction in house prices and is it time for him to admit that the Auckland housing market is out of control and his policy has failed?Hon BILL ENGLISH: No. The ASB Bank of course has the choice of not making silly lending decisions and stoking along the market if it is believed that that is what is happening. It should not be taking big risks with shareholder capital and depositors’ money. I am pleased the member has now noticed there is a challenge in the housing market because the Government started working on it 4 years ago with the Productivity Commission inquiry followed by the special housing areas legislation which Labour opposed. But others such as the Auckland Council are working constructively with the Government and we are starting to make some real progress. The member should support the Government’s efforts instead of opposing them.