Last week the Reserve Bank cut interest rates again. Is the bank just feeding a property price boom? The editor of the influential magazine, The Economist (31 May) says the stock market bubble has been replaced by a property price bubble that will burst. Property is the biggest business worldwide. Over 60% of NZers’ wealth is in property. Studies show that changes in property prices have twice the wealth effect of changes in shares.
Monday, June 9th 2003, 5:50PM
by The Landlord
THE HOUSE PRICE BOOM
Worldwide property prices have increased dramatically. In the last three years house prices in Britain have risen 55% while shares have fallen 40%. House prices in real terms in Australia, Ireland, Spain, the Netherlands and Sweden, have risen in real terms more than 50%; US house prices by 30%. The OECD exceptions are just Japan, Germany, Canada and Italy. The Economist says that US house price increases are the biggest of any previous real estate boom. In New York prices have increased 47%. House prices increased 18% in Australia last year.
