News Release from Owen McShane The Centre for Resource Management Studies

On the face of it, all the signs are that house prices will fall across the board – and indeed have already started falling.

Given that the CRMS has been predicting the bursting of the housing bubble for many years it would seem reasonable to expect the Centre to expect the market to finally correct itself and restore the "good old days" when the median house price was no more than three times the median household income.

However, price is largely determined by the relationship between supply and demand. While demand may well be falling it may also be that supply is continuing to fall just as quickly.

The global financial uncertainties which are squeezing home buyers are also squeezing those who supply both the sections and the dwellings to build on them.

All around the country, proposed residential subdivisions, both large and small, are being abandoned because the developers, large and small, cannot afford to service the holding costs or pay the compliance costs and development contributions, especially in advance of any sales.

Their financiers are increasingly unwilling to carry the risk.

We have long had a situation where any proposal to develop residential property of any kind in any location attracts objectors – and whether they number in their ones or twos, or in the thousands, they can delay projects for years.

Many of those objectors are now "dancing in the streets" because developers are withdrawing their proposals. Needless to say these happy objectors are already comfortably housed and have enjoyed their capital gains.

However, these withdrawals from the market may mean that supply remains so constrained that house prices will remain high and a jumbo load of New Zealanders will continue to leave for Australia every day.

Those who are delighting in abandoned developments in their neighbourhoods might soon begin to wonder who will be left to staff the hospitals and schools, and to build the houses, and to manage the farms, and even to pay their own pensions or for their own increasing demands on health care?

We can only hope that Councillors will realise that this is the time to make life a little easier for those who house our population, and our young skilled people in particular, rather than regard them as greedy