Economy

The number of UK households in fuel poverty will more than double in January to at least 12mn unless the next prime minister takes “immediate” action to curb spiralling energy bills, a coalition of groups has warned.About 28mn people in 12mn homes, or 42 per cent of all households, will not be able to afford to adequately heat and power their properties from January, when a typical yearly energy bill is forecast to exceed £5,300, according to the End Fuel Poverty Coalition.That compares with an estimated 10.7mn people in 4.6mn homes who faced the same stresses last winter. Roughly 9mn households will struggle to live in a warm, dry home from October 1 when Britain’s energy price cap will rise 80 per cent to £3,549, according to the forecasts. The cap dictates bills for the majority of British households.The bleak forecasts will add to the pressure on Liz Truss and Rishi Sunak, Tory leadership contenders, to tackle energy prices and the wider cost of living crisis. The winner of the race to become the next prime minister will be announced on Monday. “The households affected in these numbers all face a real risk of making daily economic sacrifices that compromise their standard of living, with many of them at risk of health complications caused by living in a cold damp home,” the coalition warned.Ruth London from Fuel Poverty Action, a coalition member, said there would be “many thousands of deaths in cold damp homes” this winter unless the government took further action. She also warned of “widespread health crises, cold and hungry children unable to play or do homework, and older people who can’t be discharged from hospital because their homes are not fit to live in”.The coalition — whose members include the trade union Unison, local authorities such as the London Borough of Camden and charities and campaign groups — said its forecasts followed a similar methodology to government data tracking fuel poverty, which can be defined in various ways. Energy companies have urged the new prime minister to immediately ease pressure by increasing a £400 discount on all households’ energy bills, which is due to take effect in October. Officials have also been preparing a list of alternative options to present to Boris Johnson’s successor as early as next week.Truss, the frontrunner in the race, has refused to be drawn into details about how she will tackle the cost of living crisis, but has said she would look to increase domestic energy supplies, and outlined support for measures such as a one-year moratorium on green energy levies.

Sunak, meanwhile, has said he would support families struggling with soaring energy prices by scrapping VAT on fuel bills. Fuel poverty has traditionally been defined as a household spending more than 10 per cent of its income on energy, although that definition has been rejected by many campaign groups, including the Fuel Poverty Coalition. It says that definition includes wealthier families that can spend a tenth of their income on gas and electricity.The government said: “Direct support will continue to reach people’s pockets in the weeks and months ahead, targeted at those who need it most like low-income households, pensioners and those with disabilities. “As part of our £37bn package of help for households, one in four of all UK households will see £1,200 extra support, provided in instalments across the year, and most people will receive a £400 discount on their energy bills over winter. “Ministers are having ongoing discussions with industry on what more can be done to ensure markets function effectively for consumers in the face of rising gas prices.” More

Laws to encourage more development and denser housing don’t do much good if no one enforces them. As the state political calculus shifts, Gavin Newsom is trying to change that.By any objective measure, nothing that happens in Woodside, Calif., is going to make much difference to a state whose housing crisis is characterized by some of the nation’s highest rents and home prices and has more than 100,000 people living on its streets. The town, a wealthy enclave of the Silicon Valley, is less than 12 square miles and contains about 5,000 of California’s 40 million residents.But earlier this year, when Woodside’s government made a curious announcement that the town was being designated a sanctuary for mountain lions — a move that, as it happened, would also protect a hamlet of multimillion-dollar homes from a new law allowing duplexes across the state — the response was an object lesson in how California politics have shifted as housing has become voters’ primary concern.The Department of Housing and Community Development, California’s main housing agency, said it was investigating the mountain lion plan. The state attorney general followed with a letter (and a news release announcing the letter) that said the proposed sanctuary was illegal, and accused the town of “deliberately attempting to shut off the supply of new housing opportunities.”Along the way legislators, housing advocates and even the Sacramento-based Mountain Lion Foundation pilloried the move. Woodside reversed course after the Department of Fish and Wildlife advised city officials that it was impossible for the entire town to be considered a cougar habitat. Shortly after, the city announced it was taking applications for duplexes.Woodside, Calif., tried to declare itself a mountain lion habitat, a move that would have barred duplex housing in the town. The state pushed back.Jim Wilson/The New York TimesFor the past six years, through boom, bust and pandemic, California’s Legislature has ended each session with a blitz of new laws that aim to make housing more plentiful and affordable. Statewide rent control. Moves to encourage backyard units. A dismantling of single-family zoning rules. The barrage continued in this year’s session, concluded on Wednesday, when lawmakers passed a pair of measures that aim to turn retail centers, office buildings and parking lots into potentially millions of future housing units — moves that caused many political observers to reconsider what is politically possible.The laws received a decent amount of fanfare at each signing, signaling a turn in state policy and priorities. Until recently though, no one put much effort into enforcing them.That has started to change as Gov. Gavin Newsom has, for reasons practical and political, shifted toward an increasingly aggressive effort to enforce laws already on the books. This ranges from small-scale stings, like the state housing agency’s sending letters to local governments telling them that they are out of compliance with state housing regulations, to much larger efforts, like a first-of-its-kind investigation into San Francisco’s notoriously complex development process.In some cases, the governor’s office is working with the attorney general to initiate lawsuits against localities that they believe are breaking the law. Rob Bonta, the California attorney general, who along with Mr. Newsom is running for re-election this year, said he expected this to only get more intense.“We are just getting started,” he said in an interview.The policy is simple: Laws that are good enough to sign should be good enough to enforce. But there are political calculations as well, and they begin with a harsh reality. No matter how much legislation the state passes, its housing crisis is so deep and multifaceted that it will be nearly impossible to show real progress in any given political cycle, and probably not for decades.Read More on the Newsom AdministrationGasoline Cars: California is moving ahead with a ban on the sale of new internal-combustion vehicles in the state by 2035, as part of Gov. Gavin Newsom’s big climate plan,Injection-Site Bill: The governor vetoed a bill for supervised drug-injection sites in California, saying the state was not ready to put the idea into practice.Abortion: With the end of Roe v. Wade, Mr. Newsom vowed to “fight like hell” for abortion rights. His state is also looking to enshrine those rights in its constitution.Contentious Bills: The governor must decide whether to sign into law or veto several proposals that have drawn intense lobbying from both sides. Here is a closer look at some bills under consideration.That is a hard sell to voters who would like quick victories. Lacking a slam dunk to point to in campaign ads, Mr. Newsom and others have been applying the law, loudly. Take, for instance, the recent interview in which the governor told The San Francisco Chronicle that “NIMBYism is destroying the state” (referring to the “not in my backyard” attitude that impedes new housing). Or the mad rush to condemn Woodside. Or the Housing Strike Force that Mr. Bonta announced in November.“Over the last 50 or 60 years, cities have not made the right decisions collectively on housing,” said Jason Elliott, a senior counselor to Mr. Newsom who oversees housing policy. “That has left us in a place where the state has no choice but to enforce the law.”The notoriously complex development process in San Francisco is the focus of a state investigation.Jim Wilson/The New York TimesCalifornia has long been described as a look at the nation’s future, and in the case of housing, the good and bad, this frame has held true since the end of World War II. Today, as the rising cost of housing has ballooned into a national problem, state legislatures across the country have mirrored California by passing a host of new laws that aim to speed new development and allow denser forms of housing.The Biden administration is hoping to encourage these efforts with a “Housing Supply Action Plan,” which, among other things, would use grant funding as a carrot for local governments that liberalize their housing laws.Those reforms won’t amount to much if cities never follow them, however. And while that might sound obvious, passing laws that nobody follows has historically been where state housing policy began and ended. That’s because, in California and elsewhere, most of the power about where and how to build has traditionally been left to local governments, on the theory that land use is better handled by people closest to the problem.“The role the state was playing is that they would mostly advise cities on what to do and make recommendations,” said Ben Metcalf, who is managing director of the Terner Center for Housing Innovation at the University of California, Berkeley. He ran California’s Department of Housing and Community Development from 2016 to 2019.The problem is that homeowners and renters from a wide range of income levels are frequently antagonistic to having anything, and especially anything dense, built in their neighborhoods. And local elected officials are beholden to them. The result is that even though California has had various housing laws on its books for decades, cities regard them as pliable, and the state, in deference to local control, has rarely challenged them.“For decades there has been a pattern where cities flagrantly ignore state housing law and the state responds by halfheartedly saying, ‘Can you pretty please follow the law?’” said Laura Foote, executive director of YIMBY Action, a San Francisco Bay Area-based nonprofit that supports building more housing around the country. “Then the cities ignore them, and the state says, ‘OK, we’ll get you next time.’”Laura Foote, the executive director of YIMBY Action.Andrew Burton for The New York TimesUntil 2017, when a suite of new laws expanded the Department of Housing and Community Development’s authority, it wasn’t even clear if it had the power to penalize cities that weren’t following state housing dictates. Mr. Newsom’s administration has since used $4 million to create a housing Accountability and Enforcement unit to investigate cities and implement the laws, while legislators have usurped local authorities by forcing them to plan for more and denser housing, hemmed their options for stopping it, and created measures to strip them of land use power when they don’t comply.“It gives us something to ensure that these programs aren’t just writing,” said David Zisser, who heads the housing department’s new enforcement unit.As affordable housing problems spread, California’s enforcement kick could be an indication of an increasingly pitched battle between cities and states over housing. It also gives a clue into how Mr. Newsom might defend himself from political attacks over California’s housing and homelessness problems, something that is all but guaranteed to happen if he seeks higher office. (A Newsom run for the Democratic presidential nomination in 2024 is currently the stuff of political parlor games, and despite the chatter, the governor and everyone in his camp dismiss such ambitions.)In the interview, Mr. Elliott, the housing adviser, noted that the advantage the governor has in enforcing tough housing measures is that he draws votes from around the state instead of locally. The administration can play the heavy in a local dispute without having to worry about alienating its entire voting base.“It’s very logical, politically, for an individual city council person or an individual member of a board of supervisors to be against an individual project,” he said. “I think the job of the state is to change the political calculus so ‘yes’ becomes the default instead of ‘no.’”There is already some indication that years of state housing bills, combined with rising voter frustrations, have started to create such a shift. When the state housing department opened its investigation into San Francisco in August, London Breed, the city’s mayor, welcomed it with a tweet.“When I ran in 2018, it was a vulnerability to be an unapologetically pro-housing candidate,” said Buffy Wicks, a Democratic Assembly member from Oakland who wrote one of the two main housing bills passed by the Legislature this week. “Now it is absolutely an asset. I get up on the floor of the Assembly and I say, 10 times a week, ‘We have to build more housing in our communities, all of our communities need more housing, we need low-income, middle-income, market rate.’ You couldn’t do that in a comfortable way four years ago.”Cities seem to have absorbed the new reality of a state on closer watch. Last year, after the Legislature passed the duplex law, dozens of cities responded by adopting a slew of new ordinances that don’t explicitly prohibit the units but, through a series of tiny rules, tried to discourage anyone from actually building them.Woodside’s Mountain Lion proposal got the most attention but was far from the only one.When Temple City, in Los Angeles’s San Gabriel Valley, adopted rules for how it would carry out the duplex law — rules that required new units to have a large outdoor courtyard, the highest level of energy efficiency, and restricted future tenants from parking on site or obtaining permits to park on the street overnight — the City Council was clear what the aim was.“What we are trying to do here is to mitigate the impact of what we believe is a ridiculous state law,” said Councilman Tom Chavez, just before the Council unanimously passed the measure.By April, the Department of Housing and Community Development had warned Temple City that its new ordinance was likely in violation of at least five state housing laws. In an email, Bryan Cook, the city manager, said it was working with the state and would consider changing the ordinance after its work with the state was done. More

Under the 2020 United States-Mexico-Canada Agreement (USMCA), which has tougher labor rules than its predecessor agreement, activists have increasingly flagged alleged misconduct around union representation and demanded higher wages after years of stagnate pay.The petition from Mexican union SNITIS over BBB Industries in the border city of Reynosa, which refurbishes auto parts, did not reach a standard of a “sufficient, credible evidence of a denial of rights” to trigger USMCA enforcement tools, the USTR said in a statement. SNITIS had said in a petition to the U.S. government last month that BBB Industries workers were intimidated and threatened during a contract vote, among other irregularities. The Alabama-based company said it respects the rights of workers to choose a union of their choice and welcomes any government probe. It previously denied the allegations by SNITIS and said it followed procedure to ensure fair voting. SNITIS said it was disappointed by the USTR decision.”We will continue demanding action from the authorities to redress this denial of labor rights,” it said in a statement.The U.S. government has filed five labor complaints under the USMCA since last year, including at a General Motors (NYSE:GM) plant and a Stellantis-owned factory. More

The UK’s largest chicken producer faces having to pay £1mn a week in extra costs for the carbon dioxide used to stun birds for slaughter, the company said on Thursday, after a supplier pushed up prices following news of a big UK plant halting production.Ranjit Singh Boparan, founder of 2 Sisters Food Group, which processes more than 10mn birds a week, said “beleaguered shoppers . . . will ultimately pay the price with further price rises” for the increasing cost of the gas.“Once again, UK food security is under threat, the shopper loses, and we simply have no choice other than to pay to keep supply,” Boparan said.The UK faces a potential shortage of carbon dioxide, which is used in the poultry and pig industries as well as brewing, carbonated drinks production, food packaging and refrigeration.Supplies are expected to be squeezed after CF Industries, the US fertiliser group which is the UK’s largest carbon dioxide producer, announced a temporary halt to production at its Billingham plant in north-west England.Carbon dioxide is normally produced there as a byproduct of ammonia manufacture, which CF Industries said would be suspended because the price of natural gas, the main feedstock for the process, has hit record levels and made production uneconomical.The gas is sold to food and drinks companies in the UK not by CF Industries but by a series of industrial gas groups which trade domestic and imported carbon dioxide. CF had produced about a third of the total. Boparan said a big supplier in the UK had raised prices by “up to 20 times current levels”, without naming the company. He called for government intervention, saying: “This is clearly a national security issue and has to be dealt with as a matter of urgency. I’d like to see an acknowledgment of the problem and action to regulate the CO₂ market, or at least consider price capping.”

Officials have ruled out further state financial support after putting a three-week package in place in September last year to enable production to continue.One official told the Financial Times last week that “it is for the industry to resolve this. If they haven’t sort[ed] out their supplies since October then that’s their problem, but most of them have”.High prices for natural gas have also led to carbon dioxide shortages around Europe after ammonia producers in Italy and Germany cut production.In the year to July 2021, 2 Sisters reported £95.5mn of losses, up from £34.3mn a year earlier, according to its latest accounts filed at Companies House. Boparan has previously warned of steep rises in chicken prices as a result of input cost rises, saying that “the days when you could feed a family of four with a £3 chicken are coming to an end”. More

HOUSTON (Reuters) -Exxon Mobil Corp and Shell (LON:RDSa) Plc on Thursday confirmed the sale of their California oil joint-venture Aera to German asset manager IKAV for $4 billion, ending a 25-year-long partnership that was one of the state’s largest oil producers.The sale reflects the two companies move out of mature energy properties at a time when high oil and gas prices favor new deals. Reuters this week reported the oil giants were in advanced talks on a sale of the San Joaquin Valley property.The deal puts a company with conventional and renewable energy investments in charge of a living relic of California’s early oil and gas production. IKAV has 2.5 billion euros ($2.49 billion) under management and owns wind, solar, geothermal and oil and gas operations. It operates a Colorado natural gas business acquired two years ago from BP (NYSE:BP). The transaction is expected to close in the fourth quarter of 2022, subject to regulatory approvals. Shell faces a $300 million to $400 million impairment charge as a result of the sale, it said.IKAV buys assets with strong cash yields and holds them to maximize returns to its funds, according to its website. Last year, it built a solar plant in Italy and took a majority stake in Metaenergia, an Italian operator of gas-fired power plants. Exxon (NYSE:XOM), which owned 48% of Aera, has been divesting operations as it focus on Guyana, Brazil offshore and liquefied natural gas projects. The deal brings its closer to a target of selling $15 billion in assets. The Aera sale fits a strategy of focusing investments “in low-cost-of-supply oil and natural gas to meet consumer demand and create value for our shareholders,” said Liam Mallon, president of Exxon’s Upstream Company, in a statement. Shell Upstream Director Zoe Yujnovich said the sale follows a strategy to focus “on positions with high growth potential and a strong integrated value chain”. Aera was formed in 1997 and has operations in eight onshore fields in central California. In 2021, the company produced about 95,000 barrels of oil and gas per day, according to the statement. Both oil producers are keeping their other California operations, including gas station chains.($1 = 1.0057 euros) More

China has condemned a US move that threatens its access to high-end processors from American companies that are central to the most demanding artificial intelligence work, after Washington stepped up its efforts to restrict exports of cutting-edge technology to its trade and military rival. US officials have told chipmaker Nvidia that it will need special licences to sell Chinese customers two of its processors that are widely used to speed up AI calculations, the company said in a filing on Wednesday. The government is imposing the requirement on any products containing its A100 and forthcoming H100 graphical processing units. The processors are used as “accelerators” to speed up the most data-intensive parts of the machine learning calculations used in AI. AMD, whose GPUs are also used as accelerators for AI calculations, said it had also been told that it would need to apply for licences in order to sell its most advanced accelerator, the MI250X, in China.Thank you for reading FirstFT Asia. PS you can join board members and C-suite executives in person or online for the Cyber Resilience Summit on September 21-23 at Beau-Rivage Palace, Lausanne. Register for your pass today. — EmilyFive more stories in the news1. Taiwan shoots down suspected Chinese drone for first time The Taiwanese army said an unidentified commercial drone equipped with cameras intruded into restricted airspace over the waters around Shihyu, a Taiwan-controlled islet less than 4km from Chinese territory.2. UN inspects Russian-held nuclear plant in Ukraine The UN’s atomic safety watchdog was able to inspect the Russian-occupied Zaporizhzhia nuclear power plant in southern Ukraine on Thursday, and said it would set up a “continued” presence at the site on the frontline of Russia’s invasion of Ukraine. The inspection followed several tense hours in which officials were held up in a front-line area as gunfire echoed from nearby battles.3. China committed human rights violations in Xinjiang, UN finds The UN high commissioner for human rights has accused the Chinese government of committing “serious human rights violations” in its treatment of Uyghurs and other Muslim ethnic minorities in Xinjiang. The long-anticipated report said there was credible evidence of torture and gender-based violence in detention camps in the north-western region of China.Explainer: Following the UN report, some western governments, including the UK, have called for the UN to start a formal investigation of abuses in Xinjiang. Here’s what could happen next.4. IMF reaches preliminary deal on $2.9bn Sri Lanka bailout The announcement yesterday, at the end of a week-long IMF mission, offered the first indication of a path out of insolvency for the country of 22mn, which has run out of cash and suffered crippling shortages of fuel and essentials this year.

Demonstrators on the streets of Colombo in July protesting against the government’s failure to tackle Sri Lanka’s economic crisis © Chamila Karunarhne/EPA-EFE/Shutterstock

5. China’s carbon emissions fall 8% as economic growth slows The fall in emissions in the April-to-June quarter compared with the same period last year marks the sharpest decline in the past decade, according to climate research service Carbon Brief. But it also reflects a dramatic slowing in Chinese economic growth caused by large-scale coronavirus lockdowns. Further reading: Click here to receive this weekend’s The Climate Graphic: Explained newsletter. Have you kept up with the news this week? Take our quiz. The days aheadUS non-farm payroll data Figures are expected to show the US economy added 300,000 jobs last month, down from a five-month high of 528,000 in July, and that the unemployment rate is expected to remain at a historically low level of 3.5 per cent.FT Weekend Festival It’s not too late to buy in-person or digital passes to tomorrow’s FT Weekend Festival featuring debate, tastings, Q&As and more. As a newsletter subscriber, claim £20 off your festival pass using promo code FTWFxNewsletters at: ft.com/ftwfMikhail Gorbachev’s funeral Gorbachev is to be buried on Saturday at Moscow’s Novodevichy cemetery, the final resting place for hundreds of Russian dignitaries, alongside his wife Raisa, who died in 1999. President Vladimir Putin will not attend because of scheduling conflicts, the Kremlin has said.What else we’re reading and listening to China waits on ‘miracle’ to end zero-Covid policy Experts believe President Xi Jinping’s zero-Covid policy will continue into 2023 even as Xi’s relentless efforts to rid China of coronavirus are taking a huge economic toll. Officials are holding out for Chinese scientists to develop vaccine technology to stop coronavirus from spreading.

India’s bid to join the global semiconductor race India wants to take a step up the manufacturing value chain, with a high-stakes bid to begin making semiconductors. But to have any chance of achieving its goal, India will need to move exceptionally quickly and decisively.Related listen: On the Rachman Review podcast this week, Gideon speaks to one of the most distinguished historians of modern India to discuss whether India will soar or struggle in the coming years.Australia seeks to rival China on lithium production Australia’s first battery-grade lithium refinery, the largest outside China, has opened talks with electric vehicle makers as it seeks to meet surging demand from global automakers for the mineral. Global lithium supply is expected to triple in the next nine years, according to investment bank Barrenjoey.Ai Weiwei’s a tribute to the ‘ultimate freedom’ The centrepiece of a new solo show in the Church of San Giorgio Maggiore by the Chinese artist Ai Weiwei entitled “La Commedia Umana”, has been assembled from more than 2,000 pieces of black Murano glass fashioned to replicate bones, organs and surveillance cameras. The result is a hypnotic, hanging ossuary that begs us to fight for our freedom before we die.Why intellectual humility matters Intellectual humility can be thought of as a willingness to recognise our cognitive limitations and biases, and to be more interested in understanding the truth of an issue than in being right. A lack of it can make some people believe in conspiracy theories and false news reports, writes Jemima Kelly.ScienceThe headlines this year have been dominated by war in Europe, soaring inflation and worries about climate change. But there has also been a series of remarkable breakthroughs in everything from microbiology to astronomy. The FT’s science desk has put together the top five stories this year.

A young, star-forming region called NGC 3324 in the Carina Nebula, as captured by the newly operational James Webb Space Telescope © Nasa, ESA, CSA, STScI More

The maintenance of 600 reais ($114.88) monthly payments under the Auxílio Brasil program is one of the main promises of President Jair Bolsonaro in his quest for reelection in October, while he trails former president Luiz Inácio Lula da Silva in opinion polls.But in next year’s budget bill, the government reduced cash handouts to 400 reais because keeping the current level would require circumventing the spending cap rule, and there is no legal provision for this so far. Speaking at an event hosted by Sebrae, which promotes the competitiveness of small businesses, Guedes said a calamity decree could be signed if the war in Eastern Europe continued.During the pandemic, the state of calamity made it possible for extraordinary expenses to be made without having to comply with the spending cap rule.Later on Thursday, at a different event, he stressed that a calamity decree would not be the ministry’s “preferred” solution, as it would be temporary. A permanent action would involve taxing dividends received by the “super rich,” he added.Still, Guedes said the payment of 600 reais next year is “guaranteed,” and said that dividend taxation would ensure sufficient funds for the program and compensate for greater income tax exemption for the poorest Brazilians – addressing two campaign promises made by Bolsonaro.Guedes predicted the country’s gross debt would fall to 76.6% of gross domestic product after the development bank BNDES returns 90 billion reais ($17.26 billion) it owes the Treasury, which he said would happen soon. Guedes also said the Federal Reserve is in talks with the Brazilian central bank to implement the Pix instant payment system in the United States.Launched in November 2020, Pix is ​​free of charge for individuals but policymakers allow banks and payment institutions to freely define costs for merchants, both for transfers and receiving funds.Its massive use by Brazilians has seen it surpass the level of transactions with credit and debit cards in the country.($1 = 5.2227 reais)(Reporting Rodrigo Viga Gaier and Marcela Ayres; Editing by Steven Grattan and Richard Pullin) More

BENGALURU (Reuters) – New Zealand’s house prices are forecast to fall 10% this year and 5% next as aggressive interest rate hikes take some heat out of a blazing housing market, but not enough to solve the ongoing affordability crisis, a Reuters poll found.Billions of dollars in government stimulus and historically low interest rates during the pandemic have inflated house prices far ahead of wage growth in one of the least affordable housing markets in the world.House prices have risen more than 40% since the start of the pandemic and nearly doubled in the last seven years, which has led to increased homelessness, fuelled inequality and kept many would-be first-time homebuyers as renters.Although house prices fell a modest 1.6% year-on-year in July, its first annual fall since 2011, they are still very far from returning to pre-pandemic levels.Average home prices were expected to decline 10.0% this year, according to an Aug. 15-Sept. 1 Reuters survey of 11 property analysts. Those estimates showed a slightly deeper decline than the 9.0% fall predicted in a May poll.Another 5.0% fall was expected next year.”House prices will continue to decline and there’s not much in the economic outlook that will stop that,” said Sharon Zollner, chief economist at ANZ.”With private-sector wage growth accelerating to 7.0% in the year to June 2022, there’s a risk the Reserve Bank of New Zealand (RBNZ) may need to lift interest rates even higher than expected, which would weigh further on real house prices.”Despite the expected fall, the drop in prices was too small to offer much reprieve for first home buyers. Average prices have soared over 250% since 1998, almost four times the average increase across OECD countries.The RBNZ, which has considered house prices in its policy deliberations, has hiked rates by a total of 275 basis points since October last year and is forecast to take rates to 4.0% early next year.Prices must drop around 20% to reach a sustainable level, the central bank says. But some respondents in the poll said more was required.Capital Economics, Infometrics and Kiwibank said average house prices would have to fall between 20 and 30% – roughly the amount they fell after the oil shock of 1973 – to make housing affordable.”It will take until at least 2027 for house prices to be back towards a more fair valued position, in real terms,” said Brad Olsen, principal economist at Infometrics.When asked to describe the level of New Zealand house prices on a scale of 1 to 10, from extremely cheap to extremely expensive, the median response was 8. For Auckland, it was 9.(For other stories from the Reuters quarterly housing market polls:) More