Sir John Key predicts house prices to drop but market won't collapse

Lloyd Burr 04/11/2021

LISTEN: Rapid house price growth is unsustainable, says former Prime Minister and ANZ bank chairman Sir John Key.

Property prices are skyrocketing - like in Manawatu, where the median house price in Manawatu went up 35 percent year-on-year in August.

"House prices have come enormous distances and can they really carry on at this sort of pace? It's not sustainable - everyone knows that," he told Lloyd Burr Live.

But Sir John said he doesn't believe a sharp decline or collapse of house prices will happen.

On Thursday, he spoke virtually at the launch of a new NZ Initiative report on the risk of another Global Financial Crisis.

The report said, "with zero interest rates and money printing, asset prices have soared, consumer prices have risen, and public debt has reached dangerous levels globally."

The result is an "economically perilous future."

On Auckland's current lockdown restrictions, Sir John said he felt sorry for the many businesses who are struggling.

"It's really tough. If you're trying to keep everything afloat, can't open and you don't have customers - it's really difficult times," he said.

Sir John said Wellington-based politicians don't understand the "pain" Auckland business owners are feeling.

"The macroeconomic numbers mask what's going on," he told Magic Talk.

"If you're in the hospitality or restaurant sector you haven't been able to open for 11 weeks and yeah, there's some support in there, but it's nothing in comparison to the costs and things you have going on."

Sir John said it makes no sense that the Government is allowing people to get botox but is not allowing hairdressers to reopen.

He said the Government should be putting more pressure on unvaccinated people, including limiting things they can do like flying or dining out, in order to get them jabbed and for the country to open up again.

But Sir John said there will be a group of people who will never get vaccinated, no matter how hard the Government tries to persuade them.

"Ultimately are [they] going to drive every business into the ground because [the'yre] waiting for a group of people who just don't want to vaccinate," Sir John told Magic Talk.

While everyone has a right to refuse the vaccine, Sir John says the small group of determined anti-vaxxers should not hold up returning to normal life for the majority of New Zealanders who are vaccinated.

Listen to the full interview with Sir John Key above.

Magic Talk | Lloyd Burr Live, weekdays from 4pm

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