From Tony's Sporadic Newsletter #8
Eight Records driving Auckland's House Prices.
1. Record low interest rates.
2. Record net migration inflows.
3. Record migrant wealth.
4. Record aging bulge.
5. Record leap ahead of Auckland as a global city and agglomeration.
6. Record physical land pressure.
7. Record delayed purchasing catch-up.
8. Record under building.
Summary.
Is there a housing bubble? No and yes.
No in that the bulk of Auckland’s house price rises are driven by at least the eight factors at record levels just mentioned.
Yes in that the momentum is so strong the investor frenzy is gettingunderwaywith more to come.
Where will it end?
Policy changes won’t stop it.
The Reserve Bank can’t.
The most probablecandidate is a global economic downturn hitting us at the same time
as we enter a period of weak growth
or our own recession as the unsustainable factors driving our economic growth recently and currently fade away
and the traditionalround of failures ensues of over-extended businesses and households.
Best guess?
Again as outlined in Sporadic 7, maybe 2018.
Just remember that when the fall comes,
ts extent will be aggravated by the magnitude of the frenzy state the market isnow entered,
and mitigated by the massive strength of the factors mentioned above – expect for the migration one which will eventually go into reverse. It always does. Good luck.
Eight Records driving Auckland's House Prices.
1. Record low interest rates.
2. Record net migration inflows.
3. Record migrant wealth.
4. Record aging bulge.
5. Record leap ahead of Auckland as a global city and agglomeration.
6. Record physical land pressure.
7. Record delayed purchasing catch-up.
8. Record under building.
Summary.
Is there a housing bubble? No and yes.
No in that the bulk of Auckland’s house price rises are driven by at least the eight factors at record levels just mentioned.
Yes in that the momentum is so strong the investor frenzy is gettingunderwaywith more to come.
Where will it end?
Policy changes won’t stop it.
The Reserve Bank can’t.
The most probablecandidate is a global economic downturn hitting us at the same time
as we enter a period of weak growth
or our own recession as the unsustainable factors driving our economic growth recently and currently fade away
and the traditionalround of failures ensues of over-extended businesses and households.
Best guess?
Again as outlined in Sporadic 7, maybe 2018.
Just remember that when the fall comes,
ts extent will be aggravated by the magnitude of the frenzy state the market isnow entered,
and mitigated by the massive strength of the factors mentioned above – expect for the migration one which will eventually go into reverse. It always does. Good luck.
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