The Reserve Bank of New Zealand's governor, Adrian Orr, has just stated that the unsustainable level of house prices poses monetary, financial stability challenges.

Key notes

House prices and housing affordability are affected by both supply and demand factors.

House prices have become more unsustainable over the past 12 months.

Well advanced in work to commence consulting on additional ‘debt servicing ratio’ tools.

Expect to see an easing in house prices over the medium term.