The price of houses and the no-bull facts

Guest Post

The housing market must be left to sort itself out. Desire and ability to purchase apposing the quantity available, sets and maintains average sales and fixes sales prices naturally. Mankind, and in particularly bureaucrats, do not possess the wisdom required to successfully interfere in what is a natural environment. Bring on the greens??

The vast majority of house sales involve a very high level of borrowed money, ie a substantial mortgage. The possession of the required cash deposit, the ability to borrow and the overall cost of borrowing therefore become absolutely vital and essential factors in the establishment of market prices.

Furthermore the desire and ability to purchase/borrow is very much dependent on the current state of the economy of the country.

The definitive factors become (1) the possession of cash and (2) the cost of borrowing, after which the market constitutes and embodies a natural form of control. The less specific factors, ie the desire to own and ability purchase, are governed and overlaid by the existing economic situation. 

Any and every form of external control must upset the natural balance of market forces. Legislation involves compromise, cannot be exact and must be tempered in order to retain the votes of those known to be contrary.

Currently, local bodies exert unnatural control by dictating where and how the public should build regardless of their true ability and desires. Bureaucrats on their bandwagon ensure their ongoing positions of control, high salaries and benefits at the expense of a gullible public.

If as a means or control, the state/government mindlessly builds houses dependent for capital on taxation or the writing of money, the market becomes utterly distorted, to a point where balance can never be restored without, at some later date, subsequent hurt and anger.

Existing forms of control, thankfully, rest presently within the authorities of a current democratically elected very centralist government and an independent reserve bank. The latter reacts directly in accordance with market forces and is surely in unbiased hands of proven commercial ability and, importantly, is open to public scrutiny. There is presently no crisis and or need for panic.

Logic rules that market forces must be allowed to restore balance. Any form of interference will result in ongoing distortion and still further continuing hapless attempts at ongoing correction. Natural forces will provide valid, gradual, equitable and lasting adjustment, given the application of common sense.


– Noble Kiwi

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