For example, in a recent international study of housing affordability, median New Zealand house prices (relative to disposable incomes) were the third highest amongst comparable countries.3 The more that house prices continue to overshoot their long-run sustainable levels, the greater the prospect of an eventual significant downward correction.
The first is to carry out so-called internal devaluation in the periphery. The second is to boost productivity and create value-added industries in the periphery. And the third is to implement fiscal transfer from the core to the periphery on the grounds of mutual benefits.