Quote:
quote:Originally posted by Hommel
In simple terms residential property prices in NZ have risen at a far greater percentage per annum over the last 4 - 5 years than have wages and rents. To me, at some stage, either property prices have to stagnate for several years, but at the same time rents and wages would need to increase by economic growth, OR property prices need to drop about 20 % to bring everything back into line. The price increases appear to have been fueled mainly by more mortgage debt and there is only a certain amount people can borrow and service. Once everyone is "mortgaged to the hilt" the main driver for property price increases is gone.
There is a very simple reason for the increase in property prices above the rise of inflation.