Also - no capital gains tax means that most domestic investment is poured into housing as opposed to something productive like investing in business.

This. We also have large numbers of Chinese coming over and buying houses because it's a safe store of value... something the Chinese government can't just take one day.

Oh wow. This is happening in Australia, but with no capital gains tax it must be worse in NZ.

I'm so sick of it. Houses should be for living in, goddamn it. Not for storing your cash out of reach of a corrupt government, as necessary a thing as that is.

Does the government in Australia also insist that it is only a tiny portion of sales, while refusing to actually gather data showing what the reality is?

Also, cost of construction is very high, which makes driving up the price of an existing house much more desireable than building a new one.

Compliance costs increased in the wake of the Christchurch earthquakes. Local councils also like to derive a fat revenue stream from subdivision consents.

Thanks in large part to our of love of duopolies here.

Interest rates here are way above inflation. according to the below reserve bank site inflation is 1.3% (stated in text, looks higher in that graph at closer to 2%) and the cash rate is 1.75%. This translates into interest on a mortgage being somewhere between 4.7% - 6% depending on fixed term duration etc. Mortgages here always have very short terms with a maximum of about 5 years.

http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-infl...

http://www.rbnz.govt.nz/monetary-policy/official-cash-rate-d...

https://www.asb.co.nz/home-loans-mortgages/interest-rates-fe...

The parent commenter said "(real, unadjusted) inflation". The inflation rate published by the Reserve Bank is calculated for everyday items as used by some demographic, but excludes the rising price of assets such as houses themselves, or the health costs of the aged demographic. If you treat the rental and purchase price of houses to be part of the real inflation rate (because they are compulsory costs for people living in Auckland) and appropriately weight them in the basket of items considered, then the real year-on-year inflation rate is far higher than the Reserve Bank's interest rate, causing even more locals to borrow money for more houses.

Would it? If we are using that inflation rate then we should compare it to the interest rates you can actually get - around 5-6%. This article puts inflation including housing at around 2.5% late last year (half the 5% interest rate you can get). I know we have had steep housing cost rises lately, but they aren't rising right now. I can't see how that was calculated though and it seems lower than I'd expect.

http://www.radionz.co.nz/news/national/311147/call-for-infla...

I'm sorry but when housing expenses are typically 30%++ of the typical citizens expenses, and housing is rising at 10% to 30% per year, year after year, you absolutely should not trust anyone who says that inflation is 1% or even 2.5% (this fellow is just being extremely conservative I presume).

That's one way of looking at it. Another way is.....we can argue about what the specific numbers are, but leaving that aside, there is very obviously a major, major problem with housing costs in many countries in the world, Canada being one of the very worst affected. But in the realm of political discussion, it is almost never mentioned, and when it does come up, almost all politicians "poo poo" the idea as if it's some crackpot conspiracy theory, and if you won't shut up about it, they then resort to calling you a racist, which in Vancouver was almost a foolproof technique for suppressing discussion, until it finally got so bad that even that stopped working, but even then almost no politicians would acknowledge the elephant in the room.

It feels like a complete conspiracy. Could the explanation be as simple that all politicians own real estate, so it is in their best interests to blow the bubble as big as possible? As silly as that sounds, the numbers are literally so big that's is nearly the equivalent of winning a small lottery...and knowing human nature, how many people wouldn't compromise their principles just a little to guarantee win the lottery?

Supply (particularly in Auckland) has been a big issue. The government has recently been working to rezone more land for development/higher densities.

People are immigrating faster than houses can be built which is a major factor...

Well, in Canada for the most part they don't immigrate, they just buy their permanent residence status from Quebec, buy a house in Vancouver or Toronto, and then go back home.

At best they might send their wife, kids, and elderly parents over to take advantage of our subsidized schools and hospitals (for hospitals you can just borrow a fake ID from someone with PR status, Canadian culture is extremely trusting so we don't have any safeguards in place for abuse of any of our social services).