With Professor Bob Hargraves saying limited supply of housing may stop house prices falling, we thought one indicator showed supply is perhaps not yet tight or limited - rents.
If there was a shortage of housing supply, it would show in rental figures: more limited supply would generally mean a rise in rents. Over the last year, the supply of rental properties increased (7,000 to 12,000 on Trademe), yet the median rent stayed flat. If the equilibrium price (rent) stayed the same, yet supply rose, it would hold that demand rose at the same rate. The lack of rise in the median rent gives strength to the argument that there is not yet over supply of housing on the market. Professor Hargraves may be right in saying that there will be limited supply on the market, but rental figures seem to say not yet.
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