Monday, June 9, 2014
“By historical and international comparisons and some measures of affordability New Zealand’s house prices appear elevated (…). This in part reflects a limited housing stock from low housing investment in recent years and geographical constraints preventing a rapid housing supply response. With house price inflation running high, there remains the risk that expectations-driven, self-reinforcing demand dynamics and price overshooting could take hold.
The government’s steps to help alleviate supply bottlenecks, measures to tighten standards for
mortgage lending (…), and an increase in mortgage rates should help ease price pressures. But a sudden price correction—possibly triggered by a shock to household incomes or borrowing costs—could reduce consumer confidence, impact overall economic activity,
and hurt banks’ balance sheets,” according to the IMF’s new economic report on New Zealand.
Subscribe to: Posts
Copyright Unassuming Economist 2016