5. Housing—KiwiBuild and House PricesHon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban DevelopmentHousing—KiwiBuild and House Prices5. Hon JUDITH COLLINS (National—Papakura) to the Minister of Housing and Urban Development: Will KiwiBuild adjust to the market if the housing market falls by 10 percent or more; if so how?Hon PHIL TWYFORD (Minister of Housing and Urban Development): It's hypothetical to speculate on future house prices but it's important to realise that KiwiBuild already reflects the market and the shortage of modern starter homes that is such a feature of the current market. Because KiwiBuild homes are affordable they are likely to be the least affected by any potential movement in the market. Because KiwiBuild is focusing on parts of the market where there is a chronic shortage of affordable housing and a high demand from first-home buyers we don't expect to have to adjust the approach.Hon Judith Collins: What advice has he sought on the value of KiwiBuild houses if lending rates increase by more than 1 percent?Hon PHIL TWYFORD: I haven't requested any specific advice on precisely that issue but as I said I do not expect that the value of KiwiBuild homes will be significantly affected by even the kinds of market fluctuations that commentators are currently talking about as the high- or low-end options.Hon Judith Collins: If he hasn't sought that advice then how can he make his assumption that it won't be effective? Hon PHIL TWYFORD: Well we all make assumptions and we all make judgments and these issues are things that are discussed frequently amongst colleagues and with officials. What I'm saying is that the market currently—particularly in Auckland—has stabilised. Our Government thinks that's a good thing. We want to see a stable housing market while incomes rise. That's a successful outcome in our view. Hon Judith Collins: Does he share my concern that by requiring only a 10 percent deposit for a brand new KiwiBuild house banks are leaving borrowers exposed to interest rate rises and possible falls in property value? Hon PHIL TWYFORD: Well I welcome the recent statement by Kiwibank responded to positively by other banks about their willingness to get behind KiwiBuild and provide mortgages that require only a 10 percent deposit. But I will say this: KiwiBuild homebuyers like all homebuyers will look at all the information that's available to them. They will weigh up the risks as anyone does when they buy a home or take on a mortgage and I also note recent commentary that shows that the banks are exercising their due diligence in relation to mortgage applications with increased rigour lately. Hon Judith Collins: Will the 10 percent deposits that KiwiBuild buyers will have invested be wiped out if the New Zealand house prices fall between 10 and 15 percent as publicly contemplated by the Reserve Bank Governor last week? Hon PHIL TWYFORD: Well the first part of the member's question is highly hypothetical. I note that the Reserve Bank Governor in his recent comments suggested that house prices are expected to grow according to Reserve Bank projections by 2 percent in 2019. The governor also said that the market could go up or down or stay the same and he also noted that the reason he wants to keep loan-to-value ratios (LVRs) in place is because he's concerned that if he lifted LVRs the market would take off again. I think the member's scaremongering is not going anywhere.