There is an inevitable “correction” coming with the inflationary storm being unleashed by late capitalism. This will lead to higher interest rates, and the weak links on the debt mountain will be toppled one by one.
In Aotearoa this inevitably will include housing debt. At the moment housing values equal about 4.8 times our total economic activity as measured by Gross Domestic Product. This compares to 1.7 times in the US.
The sharemarket in Aotearoa by contrast is only worth 0.6 of our GDP compared to 2,2 times for the US.
Current household debt as a share of income has doubled over the last two decades from 80 to 160%. That means any increase in interest rates will have a dramatic impact on people’s ability to service those debts.
Some people will be forced to sell their homes. If that becomes a cascade then a deep price “correction” and broader economic crisis is inevitable.