Even if we are not familiar with the detail of the statistics, we know that in recent years residential property prices have risen hugely in much of the country, most obviously in Auckland.
To contain inflation pressures, upward adjustments to the levels of these prices must not get built into higher inflation expectations. A rise in inflation expectations would induce people to seek protection against an expected erosion of their purchasing power by raising prices and wages even faster. The evidence regarding inflation expectations has been mixed.