Study reveals causes of Auckland housing boom

Dr Arthur Grimes, a senior research associate at economic and public policy research house Motu, yesterday presented some initial results of work Motu is doing into the determinants of owner-occupied house prices.

They found a very strong correlation with the strength of the local economy as measured by the National Bank's regional economic activity index, which bundles together an array of indicators including business and consumer confidence, jobs growth, retail sales and car registrations.

A 1 per cent increase in regional economic activity, other things being equal, will deliver a 1.2 per cent increase in house prices over and above consumer price inflation.

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