RC, we have an unhealthy obsession with housing, but its not much different from many other Anglo-Saxon economies like Australia, USA, UK, Canada.

Housing affordability is a funny thing. Because its not well defined. I think most people define it as the ability to buy a house with a mortgage when you are a young couple/family. But I could be wrong. It certainly doesnt mean access to shelter. Stats NZ report shows rents are broadly stable as a share of income over time. http://www.stats.govt.nz/browse_for_stats/people_and_communities/housing/Rental-affordability-1998-2012.aspx

In politics this probably means that they want:
1) house prices to rise for those who own houses and
2) house prices to fall for those who dont own houses.

So far objective 1 has won out. But if the balance shifts, the RBNZ will have to look hard at the financial stability stuff…

The UK situation is about to get even better in January when the mortgage guarantee is extended to all first-time buyer, rather than just new builds! It’s times like this that I wish I owned a house.

Must admit I’ve probably butchered your surname a few times but I’m getting better at it.

Do you think kiwis have an unhealthy sense of housing entitlement? Isn’t housing affordability a myth? Houses are selling are they not?

RC. Thanks – you forgot to mention also the hardest last name to pronounce ;). I had the worst mangling of my last name at a speaking event in Taranaki this morning….

Your contributions are much appreciated and I look forward to more interesting posts.

As you say, many parents. So yes, it would be interesting to go back to the documents of, say, 2000-2005 and see what they say about achieving the goal of home-ownership. That’s how Greenspan couched it, after all — I forget the exact words but something about financial inventions making lending available to more people.

But, if we are going to link goals and lack of oversight, we should also examine the goals of the regulators. The revolving door between Washington and Wall Street creates an incentive for regulators to be light-handed.

Also, the AIG collapse was at least as much about being too clever by half as sub-prime lending. AIG sold derivatives then sold insurance on the derivatives, compounding their exposure to falling values. The causal chain from sub-prime failures to GFC includes those kinds of activities.

Feel free to keep writing quality posts including clear explanations and figures – while I quote posts and make sarcastic comment 🙂

Agree. We could not have spent $64m in our education system with any benefit at all…

It does, but it still means we are getting those with low incomes to take on a 90% LVR mortgage when house prices are trading at more than 20x PE (price to rents). Not sure that would be a good investment decision…