Finance Minister Bill English this morning raised the spectre of Auckland house prices possibly dropping.
In his address to the Herald's Mood of the Boardroom breakfast at The Langham, Auckland, he talked of a possible reversal of fortune, in line with house price drops in other major cities internationally.
"There will be less expectation of demand controls once Auckland prices stop rising and maybe fall, which has happened in every other housing market which has risen as fast as this one," he told more than 200 guests, going on to attack Auckland Council for its role.
See our full Mood of the Boardroom 2015 coverage here
"This is a market that has been messed up by poor planning and we will continue to do what we have to do, deepening our relationship with the people at Auckland Council, to ensure supply can respond to changes in demand. We are getting somewhere but we have quite some way to go yet," English said.
Mr English's warning came as REINZ figures showed the median Auckland house sale price dropped $20,000 last month.
The figures showed the Auckland region's median price fell from $755,000 to June to $735,000 last month, down 2.65 per cent, It follows the downwards trend highlighted by recent Barfoot & Thompson sales data.
Prices fell 10 per cent in Auckland City, and 4 per cent in Metro Auckland, but rising elsewhere across the region. Compared to July 2014 the median price increased by $125,000 (+21%), rising 32 per cent in North Shore and 29 per cent in Waitakere City
REINZ said elsewhere in New Zealand, prices were up.
Asked about the effects of the Government's October property investor tax moves, English said that was yet to play out.
"If speculators and money launderers are having a big effect, it will affect them."
He also talked of a strengthening relationship between central and local government over solving Auckland housing issues.
"People are turning up in Auckland and it has to grow and between us, we have to find a solution. If we can chip away on the demand side on housing...it's a problem of success. There's one thing a lot worse [than demand] and that's no demand. That would be really good, wouldn't it?" he asked the audience which included Barfoot & Thompson chief Peter Thompson.
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Auckland Council's willingness to work with the Government had "greatly improved" and significant progress was being made, he said.
English then complained about difficulties with the North-Western Motorway, saying it was "convoluted" to get off at Hobsonville.
Grant Robertson, Labour's finance spokesman, defended his party's revelations of foreign Chinese buyer influence on Auckland's housing market.
Labour had not intended to offend, but it was its policy to ban foreign house buyers, he said.
"If you are prepared to come here, live here, that's fine. But in terms of [foreign buyers' effects on] existing homes, that's making it more unaffordable for New Zealanders. The absence of any data on it is the issue," Robertson said, attacking the Government's October tax moves which would not provide with the information needed on the issue