He said while the Reserve Bank had argued that it already considered housing costs and house prices when it set policy, that was only true insofar as it was a driver of inflation and employment. Housing costs such as rent, maintenance and construction were part of the consumer price index that the Reserve Bank targeted for its price stability objective. But that index did not include house prices and gave little weight to the cost of land. “This means the CPI gives an incomplete picture of housing inflation for policy purposes. Similarly, in undertaking its financial stability role, the Reserve Bank considers house prices in the context of financial stability. However, as New Zealand’s stronger-than-expected economic performance has flowed through to renewed housing demand, the time is right to reconsider whether the importance of house prices in Reserve Bank decision-making should be elevated.”