New Zealand manufacturers and exporters Thursday warned the country's housing crisis is affecting their ability to compete internationally.
The Reserve Bank of New Zealand, which held the official cash rate at 2.25 percent Thursday, was too focused on reining in soaring housing prices when it needed to lower the exchange rate, said the New Zealand Manufacturers and Exporters Association (NZMEA).
The latest NZMEA Survey of Business Conditions showed total sales in April fell 2.97 percent year on year, with export sales down by 5.36 percent and domestic sales up by 2.72 percent.
NZMEA chief executive Dieter Adam cited Reserve Bank statement that it was holding interest rates despite the exchange rate being "higher than appropriate" given New Zealand's low export commodity prices.
The Reserve Bank also said house price inflation was adding to financial stability concerns.
"They noted the level of the currency remains higher than appropriate and that a lower dollar would assist the tradable sector," Adam said in a statement.
"Manufacturers and exporters need the downward trend to a fairer level to continue, rather than these movements in the opposite direction," he said.
"The RBNZ's hands cannot be tied by housing inflation when making monetary policy decisions that affect our exchange rate and manufacturers and exporters competitiveness."
More action was needed to tackle both the demand and supply side of the country's housing shortage.
Recent data from the RBNZ showing investors making up 46 percent of mortgages in the largest city of Auckland in April highlighted the need to better balance the investment and tax incentives involved, said Adam.