House Prices WON’T Plunge
August 10th, 2009
BNZ chief economist Tony Alexander has poured scorn on predictions house prices are about to plummet again. Alexander says the housing market is recovering, although the upturn may not be strong for a while yet if at all this cycle. Dwelling sales have jumped and consents are now growing and will continue to do so for the next 2 – 3 years, particularly given NZ’s housing shortage. “And that is one reason we have so strongly argued against the silly forecasts from some wayward people of house prices falling 30-40% in NZ.”
In his monthly housing forecast Alexander advises people to always ask, when listening to those promising riches or foretelling doom, what might be motivating their position. He also questions newspaper headlines pointing out negative sensationalism sells. “It is hard-wired into us to pay more attention to things which may be bad for us than things which may be good.” And he is scathing about measures of housing affordability. “Keep in mind they give zero insight into where house prices are going and are only really useful for voyeuristic commentary on the pain those on lower incomes might be experiencing to try to get into the housing market.”
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