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

 

Superu Report: Land Regulation Drives Auckland House Prices

Land use regulation is responsible for up to 56 per cent of the cost of an average house in Auckland according to a new research report quantifying the impact of land use regulations, Finance Minister Steven Joyce says. More>>

ALSO:

Fletcher Whittled: Fletcher Dumps Adamson In Face Of Dissatisfaction

Fletcher Building has taken the unusual step of dumping its chief executive, Mark Adamson, as the company slashed its full-year earnings guidance and flagged an impairment against Australian assets. More>>

ALSO:

No More Dog Docking: New Animal Welfare Regulations Progressed

“These 46 regulations include stock transport, farm husbandry, companion and working animals, pigs, layer hens and the way animals are accounted for in research, testing and teaching.” More>>

ALSO:

Employment: Most Kiwifruit Contractors Breaking Law

A Labour Inspectorate operation targeting the kiwifruit industry in Bay of Plenty has found the majority of labour hire contractors are breaching their obligations as employers. More>>

ALSO:

'Work Experience': Welfare Group Opposes The Warehouse Workfare

“This programme is about exploiting unemployed youth, not teaching them skills. The government are subsidising the Warehouse in the name of reducing benefit dependency,” says Vanessa Cole, spokesperson for Auckland Action Against Poverty. More>>

ALSO:

Internet Taxes: Labour To Target $600M In Unpaid Taxes From Multinationals

The Labour Party would target multinationals operating in New Zealand to ensure they don't avoid paying tax if it wins power and is targeting $600 million over three years through a "diverted profits tax," says leader Andrew Little. More>>

ALSO: