They actually have to build housing though – if they just kept “transfering ownership” it wouldn’t crowd out, as one person buying a house is giving a corresponding capital transfer to the person they are buying it off!

And as a result, this again suggests that we need the excessive investment to take place for their to be this “misallocation of capital”.

Not if prior owners buy more of the same stuff – houses. Stock doesn’t move much, but price of stock does cos of change in debt. More leverage to own the same amount of stuff!

Yar, the RBNZ seemed to be thinking about many of these issues before we entered the 2000s – shows why the rest of the world has such a high view of them!

I haven’t actually gotten around to reading the IMF report yet 😛

The IMF Financial Stability Report on NZ has lots of interesting data but doesn’t really refute or confirm Morgan’s thesis. I wonder what he knows that we don’t…

Too much alteration and addition work? Sure I can see that – but that would also imply that our housing stock is of “too high a quality” … which is not something I’m sure is necessarily true.

Must admit, haven’t thought it through yet myself, but is there a quality vs quantity aspect to housing investment that is relevant here?

In short, could any advantages for housing investments mean “too much” investment goes into gold plating existing houses rather than building new ones?

Rich? Or is there someone named Rick who is really into buying houses?

It should do – unless supply is completely inelastic. And if supply is completely inelastic, then a lift in investor demand for housing doesn’t “crowd out” other investor classes – as we have a corresponding transfer of wealth to prior home owners who can invest with it 😉