Interest brakes housing costs, says Minister

Press, 1 February 1986, Page 26

Interest brakes housing costs, says Minister

PA Auckland High Interest rates have held back total house buying costs, says the Minister of Housing, Mr Goff. “Although house prices have continued to increase, we have seen a much lower rate of increase,” Mr Goff said. Traditionally during the post-election period more money was available for housing, usually pushing prices up. Mr Goff said that in the year to June, 1985, however, house prices rose 13.3 per cent, compared with 35 per cent for the year to June 1982.

It was common for the housing - market to collapse after that initial post-election burst, but that had not occurred

since last June, he said. “It was stronger than I ’ anticipated It would be and we didn’t get the inflationary spiral.” In the September year, the Institute of Valuers modal house cost index - rose 8.4 per cent and the Building Industry Advisory Council building' cost Index rose 11.2 per cent both lower than in- , flation.

“The trade-off for the higher cost of the money — the mortgage — means a lower price of the house, which leaves less that has to be borrowed,”' Mr Goff said. He described that as “the silver lining to the dark cloud,” but believed some interest rates could fall this year.