PHOTO: Cameron Bagrie. Photo credit: The AM Show
An economist has a theory on why house prices have continued going up, despite the economic turmoil caused by COVID-19.
Wealthy boomers are giving the money they would have spent on overseas holidays to “little Johnny or little Jenny and it’s helping them get on the property ladder”, Cameron Bagrie told The AM Show on Tuesday.
“Mum and dad are not going to Europe, they’re not going up to the United States, they’ve got a bit of spare coin around,” he said, explaining how luxury industries like spa pools and motor homes are “off to the races”, with overseas travel a distant dream as the COVID-19 pandemic rages.
Earlier this year there were predictions house prices could fall 10 percent or more, but despite the biggest drop in quarterly GDP in history, nothing happened in the property market.
“Like it never happened,” Kiwibank senior economist Jeremy Couchman said earlier this month. Real Estate Institute of New Zealand data released last week found yields for property investors had hardly budged either, even as rents were frozen.
“Initial fears that yields would be significantly impacted by rising unemployment as a result of COVID-19 have been unfounded,” said chief executive Bindi Norwell.
READ MORE VIA NEWSHUB
