Houses could be overvalued for a very long time

Expensive property is not necessarily a bad thing, and the current housing shortage, combined with strong demand, is simply the market at work.

Now we know why the Reserve Bank is worried about the property market: according to yesterday’s minutes, it’s not because banks might get into trouble, but because if prices went up some more, that would increase the potential for them to fall later, and households could cut back spending if their wealth declined.

Could. If. Maybe. If house prices go up a lot, they might come down. Well, yes.

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