Auckland is increasingly being seen as a regional (Asia-Pacific) centre, and this no doubt accounts for a part of the stretch in price-to-income ratios. However, good long-run fundamentals do not make Auckland immune to a correction. International evidence shows that the further house price-to-income ratios deviate from historical norms, the greater the potential for a sharp and damaging correction.
Realistically, forecasters cannot be expected confidently to predict how some of these longer-term dynamics will play out. But there is little doubt that such things are becoming more important. Forecasters will be more useful the more they can help decision-makers to think through what might happen, even if they cannot say with precision what will happen.