This article is compulsory reading for all those interested in the property market. In particular the charts that Tony provides show in detail where the buying push is coming from.
Follow the links provided and then think about what the near and medium future will hold for future property prices, rent levels, and where the supply will come from.
Housing shortage was foreseen – and it will worsen
Wednesday March 27th 2013
People often ask how our low income relative to countries overseas manifests itself. We usually answer along the lines of inability to afford a proper public transport system in Auckland, poor roads throughout New Zealand, insufficient money in the health system (including for keeping our NZ-trained health professionals), loss of many young people offshore, and lack of good broadband. There are many other ways but perhaps one of the modern in-your-face ways is this. We are outbid for properties in Auckland by people offshore with deeper pockets.
That is perhaps the uncomfortable message of the concern about foreign buying – from Asia in particular given that it is in Asia that relative incomes are changing rapidly to our own rather than the UK or USA. The optimal answer is that we raise our incomes. But failing that the optimal response could be a rational public debate about foreign purchasing rules.
On the housing issue overall, this Tuesday I spent four hours at a symposium on housing affordability held at the Massey University Albany Campus. Given the special nature of the event and importance of the issue I prepared a handout and this is it here. You can find it also at http://tonyalexander.co.nz/wp-content/uploads/2013/03/Massey-March-2013.pdf
Late in 2008 when New Zealand’s recession was extended another three quarters by the global financial crisis, some people were predicting that NZ house prices would fall by 30% – 40%. The basis for their forecasts appeared to be that prices were falling sharply overseas and because NZ house prices were high by global and historic standards they would also similarly collapse in New Zealand.
Read the rest here: