Cheap loans, speculation prop up a rural land prices

The inflated land prices suggested "a degree of sectoral vulnerability", said BNZ economist Stephen Toplis. But Mr Toplis, head of the bank's market economics department, said in its latest Economic Monitor today that it would be "overly dramatic to suggest a bubble existed in land prices".

Similarly, the bank would not suggest there was a "bubble" waiting to burst in housing, but at least there was potential for improved future returns in the rural sector which gave "some justification for price movement that the housing sector may not be able to provide".

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