Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ Economists Need To Better Understand Housing

“New Zealand Economists Need To Better Understand Housing Demand And Supply”


“Recent comments by two Bank economists ( NZ Herald – “Low incomes blamed for affordability crisis” – by Anne Gibson – 25 January 2005 ) in response to the 2006 Demographia International Housing Affordability Survey, are seriously wide of the mark, in suggesting that other factors besides land and housing supply, explain why our housing is so unaffordable”, said Hugh Pavletich, co author of the Survey.

Anthony Byett of ASB Bank said that people’s poor earnings are the reason why housing is unaffordable. He is confident that the market will come back in to balance, when house prices stabilize and incomes rise. Darren Gibbs, Chief Economist of Deutsche Bank, questioned the reports value and asked whether it was meaningful or had any predictive value.

“Mr Byett would need to explain why housing in New Zealand and Australia was affordable or near affordable ten and twenty years ago, when peoples incomes were of course much lower” said Mr Pavletich adding “ and why urban markets have remained affordable in many North American cities”.

“To suggest that rising incomes will solve this serious problem is an extraordinary comment from a professional economist” he said.

The Demographia Survey uses median house price and divides it by the median household income to establish the “median multiple” of the 100 major urban markets of the six countries surveyed. It illustrates that most markets were historically affordable, in that house prices achieved median multiples of 3 or below.



“Within this years Survey, we explain in the clearest and simplest terms possible, why supply is the key determinant of urban property market performance and how any constraint on this, drives prices higher” said Mr Pavletich.

Pavletich is of the view that Darren Gibbs of Deutsche Bank may not adequately understand the important relationship between house prices and incomes. Over the past twelve months, New Zealand’s housing prices have increased by 14% and higher in many smaller cities and towns.

“For too long, property commentators have acted as cheerleaders for artificially created excessive house price increases, whilst completely ignoring the incomes that underpin them” said Mr Pavletich, adding “ The 2006 Demographia International Housing Affordability Survey will hopefully encourage more relevant and informed property market research and commentary in the future.”

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Provincial Growth Fund: Backing Growth In Gore

“Today’s announcements are a $1.6 million investment towards the Maruawai precinct project, which involves the redevelopment of the Hokonui Moonshine Museum and creation of the Maruawai Heritage Centre...” More>>

ALSO:

Inflation: Cigarette Price Rise Offsets Cheaper Petrol

The consumers price index (CPI) rose 0.1 percent in the March 2019 quarter, due to higher prices for cigarettes, Stats NZ said today... In the year to March 2019, the inflation rate was 1.5 percent, down from 1.9 percent in the December 2018 year. More>>

ALSO:

Government Suppliers: MBIE Reinstates Fuji Xerox As A

The government has reinstated Fuji Xerox as a supplier despite an ongoing Serious Fraud Office investigation into accounting irregularities that led to losses of more than $300 million. More>>

ALSO:

PSI: Service Sector Growth At Lowest Level Since 2012

April 15 (BusinessDesk) - New Zealand’s services sector activity grew at its slowest pace in more than six years in March, potentially signalling a slowdown in the domestic economy. More>>

ALSO: