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By Will Ryan
Yet another article about the housing bubble that fails to mention the two driving forces, low interest rates, and an increasing money supply.
There are property bubbles across the western world in Australia, France, England, Canada and the US. The common denominator is not Jacinda Ardern, the RMA , building code or Chinese immigration. The common factors are record low interest rates and record high money supply expansion, with 75% of all US dollars in existence created in the last decade!
Houses can’t be created at the rate of money no matter what the regulations, so more dollars chasing fewer properties results in price inflation. How can journalists write articles without mentioning such? Are they simply thick, or complicit in protecting the central bankers and their political minions who pretend to be working on housing affordability?
It’s not the job of the government to control house prices anyway, but their “stimulus” has driven them up and now if they were to raise rates in a recession, any would default and enter mortgagee a sales, the wealth effect would evaporate and confidence in this house of cards would be destroyed. Funny thing is that will happen regardless, probably a slow bleed out rather than a dramatic crash…
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