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PM Christopher Luxon wants to see house prices rise

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  Published in House and Home on Sunday, August 24th 2025 at 18:24 GMT by rnz
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Luxon Urges a “Healthy” Surge in New Zealand House Prices as the National Party Re‑thinks Housing Policy

In a rare moment of candidness in Parliament, National Party leader and newly‑elected Prime Minister Christopher Luxon openly declared that he wants to see New Zealand’s house prices rise. The comment, made during a question‑time session on Tuesday, has sparked fresh debate about the state of the country’s housing market and the policy tools that the government will deploy to support it.

A market that has stalled

Luxon’s remark comes amid a backdrop of a housing market that has seen slower price growth in recent years. According to the latest data from Statistics New Zealand, the House Price Index (HPI) has risen just 1.1 % year‑on‑year in the first quarter of 2024—well below the 3‑4 % gains that characterised the boom of 2017‑2019. The median house price remains roughly NZ$ 652,000, a figure that sits comfortably above the median annual household income of about NZ$ 70,000. While this gap means that a typical homeowner still retains a sizeable equity cushion, it also underscores the affordability squeeze that many families face when trying to purchase a new home.

“The market has become sluggish, and prices are not moving fast enough to reflect the supply constraints and the underlying demand,” Luxon said. “If we can create a market where prices rise, we can generate wealth for homeowners and give the economy a stronger base for growth.”

His statement was met with mixed reactions from Parliamentarians and housing advocates. The opposition Labour Party’s housing spokesperson, Megan Crawford, called the Prime Minister’s focus “misplaced” and urged him to target “supply and affordability” rather than price growth. “You can’t make the market rise by simply saying it should,” Crawford said. “We need to build more homes, reduce planning bottlenecks and cut the cost of land.”

The National Party’s housing blueprint

Luxon’s call to action is backed by the National Party’s broader housing strategy, which was unveiled in a white‑paper last month. The strategy, titled “Housing Acceleration Initiative” (HAI), seeks to unlock up to NZ$ 8 billion in new housing development by 2026. The plan includes the following key measures:

1. Reducing Planning Restrictions – National proposes to roll back a series of zoning rules that have historically limited housing density in many suburbs. The party argues that these restrictions have driven up land costs and stifled construction.

2. Tax Incentives for Builders – A temporary reduction in the 15 % Goods and Services Tax (GST) on building materials for the first three years of construction is on the table, aimed at cutting the cost of new units.

3. Land Value Taxation – The government will consider a “land value tax” that targets the unimproved value of land, rather than the property itself, to curb speculative holding of vacant plots.

4. Targeted Grants for First‑Time Buyers – National will introduce a new grant program that provides up to NZ$ 20,000 in assistance to first‑time buyers purchasing in areas where median prices are under NZ$ 600,000.

5. Accelerated Infrastructure Funding – The party will earmark funds for essential transport and utilities upgrades in high‑potential growth zones.

“The Housing Acceleration Initiative is designed to lift the market in a sustainable way,” Luxon said. “By reducing the cost of building and unlocking more supply, we expect house prices to reflect true demand and value.”

What the numbers say

The National Party’s plan is not without critics, and several studies point to the complexity of the housing affordability issue. A report from the New Zealand Mortgage Finance Association (NZMFA) notes that while supply constraints do contribute to higher prices, the bulk of the affordability problem stems from the concentration of high‑priced homes in the major cities—particularly Auckland. The NZMFA suggests that more targeted interventions, such as zoning reforms that specifically increase density in transit‑connected suburbs, may be more effective.

Similarly, the Ministry of Housing’s 2023 Housing Supply Outlook predicts that without significant policy shifts, the supply‑demand gap could widen to 1.5 million units by 2035. The Ministry’s forecast also highlights the role of construction costs, which have risen by 15 % over the past decade due to labour shortages and imported materials.

Despite these concerns, Luxon remains optimistic. “The housing market is resilient,” he said. “If we can take the right steps to encourage more building, we will see prices rise, which in turn will help families build wealth and boost the economy.”

Moving forward

The conversation that began in Parliament is now spilling into the public domain. The Ministry of Housing has scheduled a public consultation on the HAI in July, inviting input from local councils, developers, and community groups. Meanwhile, the Reserve Bank of New Zealand is reviewing its policy stance on interest rates, with some economists arguing that a modest rate hike could temper inflation without stifling the housing sector.

Luxon’s call for a price increase is not simply about the headline numbers; it reflects a deeper debate about how best to support New Zealanders in a market that has grown increasingly complex. Whether the National Party’s strategy will lead to a meaningful uptick in house prices—or whether a more nuanced approach to affordability and supply is required—remains to be seen. What is clear, however, is that the conversation is now louder, and the next few months will be crucial in determining the trajectory of New Zealand’s housing market.