The New Zealand Herald led this morning with a report on Westpac Economist Doug Steel’s comments at Auckland’s regional job summit yesterday, where he said housing now represented ‘fair value.’
2. Investor housing valuation Buy so long as: Rent(1- t ) + Price* π e ≥ Price( i + f )(1- t ) Maximum price investor willing to pay: Price = Rent(1- t ) / ( ( i + f )(1- t ) - π e ) t = marginal tax rate π e = long run expected capital gain i = mortgage interest rate f = other costs