13 Nov 2014

Bank wants house prices linked to wage growth

7:56 am on 13 November 2014

The Reserve Bank says it would like to see the rate of house price increases to be more closely linked to wage growth.

The central bank yesterday released its twice-yearly Financial Stability Report, saying it is still too early to lift restrictions on home lending because an unexpected surge in immigration could push house prices back up.

Governor Graeme Wheeler says the ratio of house prices to income is still well above the historic average.

Bank of New Zealand economist Doug Steel says the bank's view on the house price to income ratio suggests it is satisfied that current prices will level off and not climb dramatically.

Meanwhile, a property market analyst says heatlhy first half-year results from three of the country's major retail and commercial property funds illustrate that the sector is doing very well.

DNZ Property Fund posted a profit rise of almost 41 percent higher, while Goodman Property Trust and the Kiwi Income Property Trust, each recorded a decrease in their bottom line profit in the six months ended September, compared with the same period a year earlier.

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