Tuesday, 10 July 2007

Housing costs? It's supply and demand, stupid

New research reminds us of what anyone without an axe to grind has already realised: that the number one reason for exploding house prices in Auckland is that demand is outstripping supply, and supply is severely restricted by the availability of land.

It's not that land is unavailable, of course, it's that restrictions on the land that is available are severely reducing supply: restrictions on the expansion of the city, and restrictions on intensification within the city's urban boundaries.

The Herald's Brian Fallow
catches up on a report that we talked about here back in April: New report comfirms runaway regulation feeding runaway housing costs - Not PC.

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Blogger PM of NZ said...

Maybe supply and demand is too simplistic and the cause is more deep seated as according to this report over at CATO.

My guess is we are 20 years behind on this slippery slope...

10 Jul 2007, 18:40:00  
Blogger Seagullz said...

PC, you may like to keep an eye on This, as well.

Essentially, the US rating agencies have yanked the pin on the sub-primes, and the dominoes they are a'tumblin'.

That will probably have quite a beneficial effect here, in terms of the price/income multiple.

But, as in the US, it will come at a terrible price, for anyone north of 75% debt gearing, anyone in vanity-spending retail which is vaguely housing-related, anyone who has housing-equity-linked debt....

11 Jul 2007, 17:25:00  

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