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No, not an 'oversupply of capital' , rather a lot of capital in the hands of a few. And low interest rates. It only takes about 5% of home buyers to be foreign
by alexasmyths 9y ago
No, not an 'oversupply of capital' , rather a lot of capital in the hands of a few. And low interest rates.
It only takes about 5% of home buyers to be foreign buyers who are 'price inelastic' (i.e. they will pay above market/any price) to create a housing bubble.
If the capital were not in their hands, but more distributed through the NZ economy, I suggest that capital would be deployed differently than just in real estate.
- Retric 9y agoHousing without renters is not a productive investment.* If it seems appealing it's only because there is a dearth of productive investments available. *Like gold it can act as a hedge, but long term inflation they has negative returns when you include maintenance costs aka vaults are not free.
- tmnvix 9y ago> If it seems appealing it's only because there is a dearth of productive investments available. ...or perhaps property investment is encouraged by the tax system, is favoured by lenders, etc.
- alexasmyths 9y ago"Housing without renters is not a productive investment." Agreed. And guess what - many of the foreign buyers leave the homes empty. That they would even do this is evidence of how crazy the economic mismatch is. Which is why foreigners should not be able to buy property. Doubly important if they are not going to live in it.
- eecc 9y agoHi, we here did you get that 5% figure? Just curious
- alexasmyths 9y agoFrom the number of Toronto buyers of property who are foreign.