“Reports from our members and the most recent days-to-sell figures show that a shortage of listings is the dominant factor in housing price increases, driven by population growth, internal and external migration towards the larger centres and the cost of new home construction.
“The suggestion that the OCR increase is in response to ‘persistent buoyant housing activities and related consumption’ tends to overlook the fact that speculative expectations are not the primary reason for house price rises.
“The rise in house prices over the last couple of years should not be regarded as some sort of evil, rather as a validation of the fact that home ownership is still the preferred savings medium for most new Zealanders.
“As prices rise, so does homeowners’ equity and that increases their ability to leverage that equity to renovate or invest in other properties or businesses.
“The Institute believes that a much greater threat to our economic prospects is the recent collapse in business confidence and looks forward to the Reserve Bank controlling inflation with the wider context of ensuring sustained economic growth”. Cleland said.
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