Property price rise not just about shortage: Westpac
The Real Estate Institute’s latest data was released today and shows that houses are selling for more than 30 years’ worth of rent on average.
In 2002, houses were selling for more like 18 years' rent, on average.
Westpac’s economists said the increase was the key sign that a shortage of housing stock was not the only thing driving prices.
Chief economist Dominick Stephens said: “Physical shortages should affect both rents and prices - witness Canterbury, where rents went through the roof following the earthquakes. By contrast, financial factors such as low interest rates or speculation affect only prices. Today's high-and-rising house price to rent ratio indicates that financial factors are at play. Our finger is pointed firmly at low interest rates.”
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