Don’t blame the media for spoiling the party and precipitating the levelling off of the Auckland housing market boom. There comes a point in any long-run boom – be it for shares, property, or commodities – when rational behaviour kicks in.

Speculators consolidate their positions and the market levels off.

When it comes to Auckland housing, other factors are constraining behaviour. The most important of these is the fact that banks have curtailed the ability of their customers to take on excessive mortgage debt.

Some of this is due to central bank-imposed restrictions and some due to mere prudence. Loan-to-value restrictions limit the amount banks can lend to owner-occupiers with less than a 20 per cent deposit. Investors now have to have a 40 per cent deposit. Some may squeal, but if we are to have a resilient society, this needed to happen.
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Source: NZ Herald
Image Source: NZ Herald