These policies were mutually supportive of each other and slowed the rate of growth of house prices during the first half of 2014, despite strong net inward migration and the ongoing shortage of housing. Since late 2014, housing market imbalances have become more accentuated, particularly in Auckland where the supply shortage is greatest.
This is of concern to the Reserve Bank as it poses a threat to financial and economic stability. House prices as multiples of income and rents are already near record levels and further increases will accentuate the risk of a sharp price correction once demand and supply come in to closer balance.