Demand for better homes fuels unsustainable house prices – RBNZ study

Researchers say higher interest rates can reduce demand for better quality homes

Photo: Rachael King

A new study by the Reserve Bank of New Zealand argues that the demand for better quality housing is a “major reason” contributing to unsustainable house price growth.

House prices become unsustainably high, or “cyclically backward”, when property developers are temporarily unable to meet the increased demand for better quality homes, researcher Andrew Coleman concluded after reviewing relevant international literature.

Such capacity constraints could last for several years, during which time

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