Q&A: Mixed signals?

Hi Olly, I was wondering what your thoughts are on market leaders differing points of view. On one side you have some economists eg tony alexander and asb economists predicting the property market is going to improve by 4% this year then on the other you have a anz economist saying that our property market is over valued still by 15-25% which if eventuated would result in a fair portion of nz home owners with 0% equity. I just dont understand how these economists that were educated at the same universitys can come up such such different views? your thoughts?

Dear Scott
You are right. Economists have picked 5 out of the last 3 recessions correctly.
The trouble with numbers, charts and models is that they cannot predict emotion.
I view the scene based on personal experience over 50 years and trust that, as well as keeping up with the latest business and political news on a daily basis- both locally and internationally.
My instincts tell me that prices will stay flat and rents will rise until the tipping point comes where renters go back into the market.
I also believe that politicians cannot live with recession and survive so they will deliberately re-inflate economies- which means inflation.

You can see it already with constantly rising prices which will eventually lead to wage demands, which lead to more price rise and so on and so forth ad infinitum.

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