I have talked about the important role of interest rates in the demand for and pricing of housing. Should the Bank therefore be using monetary policy to moderate the Auckland housing market? Our view, and that of the major central banks is: not if this requires monetary policy to deviate from its primary goal of achieving stability in the general level of prices.
But other factors have also been at work, and I cannot help but think they are the result of the overconfidence that follows the experience of a strong and sustained economic expansion.