4. Housing—Affordability and AvailabilityJAMES SHAW (Co-Leader—Green) to the Prime MinisterHousing—Affordability and Availability4. JAMES SHAW (Co-Leader—Green) to the Prime Minister: Ka tū a ia i runga i te mana o tana kōrero if you go back and have a look at the first 3 or 4 years when I was Prime Minister the issue of housing was not a significant issue"?[Does he stand by his statement that "if you go back and have a look at the first 3 or 4 years when I was Prime Minister the issue of housing was not a significant issue"?]Rt Hon JOHN KEY (Prime Minister): Yes; certainly in terms of house price inflation. According to the Real Estate Institute data from November 2008 through to the start of 2012 the national median house price increased by around 5 percent—or less than 2 percent a year. More recently we have seen a number of things coming together to boost housing demand such as low interest rates growing incomes more jobs and a rise in population on the back of a growing economy. The member may not like the statement I made but actually the reality was that a combination of the global financial crisis a lot of talking heads on television telling people they were going to lose their jobs and unemployment rising to double digit amounts actually deterred an awful lot of people from buying houses. The member might recall that actually the big thing between 2008 2009 and 2010 was finance companies going broke because they had lent money to property developers for mezzanine finance who themselves were going broke because they could not sell the properties.James Shaw: Does he agree with the statement made by the leader of the National Party in 2007 that "We are facing a severe [homeownership] and affordability crisis."?Rt Hon JOHN KEY: Well it is going to be pretty awkward if I do not agree with myself. The answer to that question is yes—because the complete mismanagement of the previous Labour Government saw interest rates go to 11 percent. So of course it was having a huge impact on affordability. If the member goes and has a look at the Productivity Commission's report on housing he would see that one of the really big factors about whether people can afford housing is actually ultimately whether they can pay the interest rates on the mortgage.James Shaw: What was the average Auckland house price when he was elected and what is it now?Rt Hon JOHN KEY: The member would have to direct that question to the Minister for Building and Housing.James Shaw: Can he explain why an average Auckland house price of $493000 back in 2007 was a severe crisis but today's average Auckland house price of $975000 somehow is not?Rt Hon JOHN KEY: If one goes back and has a look at that period of time for a start house prices had nearly doubled under the previous Government and interest rates were extremely high. In fact I do not overly like referring to it because I think that in principle it is just one piece of data. But actually the Massey index in these matters points to the fact that affordability is more affordable now for the very reason of the interest rates. Yes that is cold comfort for people paying a little more but they certainly can borrow money at much lower rates. That is the difference.James Shaw: If we were apparently facing a severe home affordability crisis in 2007 but after 8 years of National Government there are still hardly any affordable houses being built does that not suggest that his plan is a comprehensive failure?Rt Hon JOHN KEY: No. If one goes back and has a look at the period of time that the member is asking me about—so that is between 1999 and 2008 of the Labour Government—real wage increases were virtually zero. So any wage increases that New Zealanders got were eroded by the level of inflation. Interest rates were steadily going up to over 11 percent. That is why we saw the significant issues that we saw in New Zealand. It is a very different position today. We have interest rates where at a retail level you can go to the bank and borrow for 4.25 percent—maybe even potentially less. Unemployment is at 5.2 percent and the average wage has risen $11000 in the time I have been Prime Minister.James Shaw: Does he agree with the Minister of Finance who said just 2 months ago that "Very little low-cost housing is being built."?Rt Hon JOHN KEY: Firstly I would have to look at the context in which the member made the speech. It will be in relation to I am guessing probably the release of some sort of land and the like. But part of the overall plan is to make sure that there is more affordable housing being built. As we know the fastest way to ensure that happens is to ensure land prices do not go up at the rate that they have been. If the Greens want to support us on Resource Management Act reform to allow us to release that land even quicker we could do that. So what the member does is parade on TV like he cares about New Zealanders—but he cares so little he is not prepared to change the law. He can keep smiling but why does he not do something about it?James Shaw: If there was a severe crisis in 2007 and then it was not an issue for the first 3 to 4 years when he was Prime Minister and now he is saying that there is not a crisis but there is a comprehensive plan to fix it does that not just show he is making it up as he goes along?Rt Hon JOHN KEY: No. There is a housing challenge and we are certainly working our way through it. Between 2008 and 2012 there was very little upward pressure at all on housing and actually real estate agents were not that busy because the economy was different. What has happened in the last 4 years is that under National's plan and under National policies the economy is extremely strong. New Zealanders are no longer deserting the country for Australia as they did under Labour; interest rates are low; business confidence levels and consumer confidence levels are very high; and of course New Zealanders feel a lot more confident about buying a house. They are the policies of success under this Government."