New Zealand is third in an OECD chart of world economic performance.
Bad news: the chart is A Worldwide Ranking of the Most Over- and Under-valued Housing.
New Zealand is the third most over-valued.
This should make it clear that NZ house prices have not entered some kind of “new normal,” but as the regular Demographia studies have pointed out, really are history over-valued.
So not a very comforting result for anyone in NZ, not for home-buyers (who struggle to afford housing priced well over historical multiples), home investors (relying on prices to stay that way), entrepreneurs (who could have used the savings that have been plunged instead into what is essentially a consumer good), or the would-be employees of those entrepreneurs (who will never see the lost opportunity or understand the reasons for it being lost).
“It’s possible to read Deutsche Bank’s rankings as a snapshot of the world’s economic imbalances,” speculates the Wall Street Journal, in announcing the news—wondering for example if “the European Union’s economic and financial troubles” have encouraged a stampede of bureaucrats into Brussels.
It’s possible, but speculation is not research.
To me, the most interesting housing markets to me are the places where house prices are becoming more affordable, especially Germany and Japan, “societies [that] still … prefer savings over spending.”
Another lesson there.
[Hat tip Hugh Pavletich]