Tony Alexander

Economic Commentaries

Weekly Overview 20 October 2016

Thursday October 20th 2016

Some people have postulated a war between the generations centred around the housing market. Sounds exciting, but it ignores the fact that no Baby Boomer lobbied the government and Reserve Bank to engineer a return to 1960s interest rate levels just as they retire and become dependent upon earnings from bonds and term deposits.

Worries about hikes in rates bills also mean none of them have sought soaring home house prices. They are as blameless as the young people when it comes to plummeting home affordability and this week we take a look at factors which account for the structural hikes in average house prices.

We also note upward revisions to projected NZ population growth rates made by Statistics NZ this week. In an environment of builder and building materials shortages it seems as obvious now what this implies for house prices as has been the case for the mixture of factors in play since 2009.