I read a lot about houses in New Zealand being overvalued. These claims are arrived at by comparing current house prices to average income levels and historical averages. The world is becoming far more gloabalised than ever. Many people can choose to live where they want and New Zealand is a highly desirable place to live. New Zealand has fairly loose immigration policies. House prices in Auckland are cheap (dollar for dollar) by comparison to many international cities.
Is it possibly the case that houses in New Zealand are not overvalued. Perhaps it is the case that incomes are simply too low. Rather than attacking high house prices all the time should we be looking at why our income levels are so low compared to the rest of the (1st) world?
This interests me because I agree house price to income ratios are out of kilter. Nevertheless, I do not think that there is going to be a big drop in house prices any time in the foreseeable future. Quite the opposite - I think house prices will keep rising, in Auckland and Christchurch at least. The only two possible outcomes then are for house price to income ratios to remain out of kilter and even get worse or for incomes to increase significantly.
All comments welcomed.
Is it possibly the case that houses in New Zealand are not overvalued. Perhaps it is the case that incomes are simply too low. Rather than attacking high house prices all the time should we be looking at why our income levels are so low compared to the rest of the (1st) world?
This interests me because I agree house price to income ratios are out of kilter. Nevertheless, I do not think that there is going to be a big drop in house prices any time in the foreseeable future. Quite the opposite - I think house prices will keep rising, in Auckland and Christchurch at least. The only two possible outcomes then are for house price to income ratios to remain out of kilter and even get worse or for incomes to increase significantly.
All comments welcomed.
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