quote:
Originally posted by Shrewd Crude
Quote:
quote:Cooper
Advanced Member
Posted - 05/02/2007 : 1:29:28 PM
He's talking about NZ house prices not being tied to affordability, Macdunk. Which means traditional methods of measuring affordability would be pretty redundant... they can just keep going, driven by foreign demand.
SC, that's a good point. I really don't know.
hey cooper, yeah yourve got my point... for example in australia they earn something like 40% more income on average than us Kiwis do (taking into account exchange rates)
35,000 * 1.4=49,000 .... is in NZ dollar terms they earn something like 49k on average per year...
300,000/49,000 = 6.1
so 6/1 for them 7/1 for us....
anyway, incomparison to western property, im sure that NZ housing is considered cheap...
foreigners see NZ as a safe haven, they see our beauty, they see our cheap housing compared to what they are used to...
This example has characteristics of Purchasing power parity...(not perfect PPP).... but still, if their domestic housing is more expensive to foreign prices... then foreigners will invest in a cheaper market... drive up prices to a point where there is no difference between domestic or foreign investment....
[8D]
.^sc