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Adrian Orr thinks house prices will drop over the next year.
The Reserve Bank Governor and his colleagues have increased the Official Cash Rate to point-75 percent, partly to deal with ballooning house prices.
Orr said what people are having to pay is well above sustainable levels but will decrease as significant supply comes on stream.
He told Mike Hosking that's despite constraints on building supplies and labour.
Orr said the momentum of what's being built at the moment is historically significant, but constraints on building supplies and labour are real.