Last week, we asked the EO of the NZPIF, Andrew King, for his take on whether NZ is in a housing bubble. This week we are pleased to have the founder and CEO of Properazzi, Alistair Helm, sharing with us his views on the housing market.
We asked Alistair
1. What are the warning signs of a growing house bubble?
2. Do you believe New Zealand (and in particular, Auckland) to be experiencing a housing bubble?
Alistair Helm – Founder and CEO, Properazzi
The principle of a property bubble is created when the value of properties being bought and sold reaches a level that is out of context with the principles of affordability coupled with the underlying financial structure of debt that is funding these property purchases is out of line with rationale financial decisions and backed by rampant speculation. In my view the financial markets are acting entirely rationally in supporting the debt of the property market. There is more prudence in the banking industry than there has been, certainly as compared to the middle of the last decade. Certainly there continues to be strong demand for property that is located in areas of the country that are proximate to the economic growth, but that demand is not irrational and prices are being paid based on buyers ability to pay and service the debt.
I do not believe that NZ generally nor Auckland in particular is experiencing a housing bubble. I believe...
