A call by a former Reserve Bank chief economist to flood Auckland with new houses to crash house prices by 40 per cent is "crazy", Prime Minister John Key says. The Government should try and cause a 40 per cent crash in house prices to bring Auckland's median back to about $500,000. Mr Grimes, who was Reserve Bank chairman from 2003-2013, said one way to bring down prices would be to build an extra 150,000 houses over six years. Mr Key said building 150,000 houses was unrealistic, given the current construction rate of about 9000 a year. REINZ data shows Auckland's median house price reached $820,000 in March this year - a 66 per cent increase in only four years, Mr Grimes noted.

Source: New Zealand Herald July 04, 2016 06:00 UTC