Who's to blame (or credit) for the post-Covid house-buying frenzy in New Zealand?
The answer appears to be the Reserve Bank.
The Government certainly seems to think so, asking Governor Adrian Orr to consider "stability in house prices" as part of its remit.
Economist Tony Alexander says the Reserve Bank has been easing monetary policy since 2015, cutting interest rates bit by bit.
"They've also been easing the loan-to-value ratio rules since the start of 2018," he says.
At the start of the Covid crisis, as the country went into lockdown and an uncertain future, Orr said the Reserve Bank was suspending LVRs for 12 months and cut rates to a historic low.
There's even talk about negative interest rates in 2021, which is unprecedented for New Zealand, says Alexander.
"They have emphasised they are expecting to keep interest rates low for a very real period of time and the Reserve Bank Governor has made a relatively strong statement suggesting the alternative to house prices rising is a great depression.
"I found that statement somewhat extraordinary, but it reinforces the Reserve Bank is not going to stand in the way of house prices rising."
The key driver for the housing market has been the loose monetary conditions created by the central bank in response to what was a pretty dire outlook last March and April, Alexander says.
While he doesn't fault the Reserve Bank for that stance back then, he does think it should be pulling back more aggressively on the LVRs and money printing now.
"I think they should pull back on saying they could have negative interest rates as well," he says.
The reinstatement of LVRs in March won't make much difference, he believes.
"It will take some of the heat out of the market but I still expect prices to be rising."
The low interest rate environment has contributed to the fear of missing out - FOMO - which is also driving the market at the moment. But Alexander doesn't think prices will continue to rise at 3 per cent a month, as happened in October.
"That was just out of whack, but I look at it this way: in the six months leading into and including March, the average increase in house prices around New Zealand was 1.1 per cent a month.
"Since March the average increase has been 1 per cent [a month]. That's where I think we're pretty much averaging going forward," he says.
Alexander thinks the FOMO phenomenon will ease after summer.
"I'm thinking summer will continue to be reasonably frenzied. There's still a lot of people out there with capital, that money they've got on term deposit, so I think the FOMO's going to remain pretty strong.
"My best guess would be first half of next year we do have FOMO coming off."
Alexander predicts a building boom over the next few years as people look for ways around soaring prices.
"That's tremendously positive for our economic recovery and eventually house prices settling down with rising supply," he says.
Brad Olsen, chief economist for Wellington-based consultancy Infometrics, says who you blame for the hot market depends what shoes you're in.
"If you're the Property Investors' Federation it's first home buyers. If you're the Government, you're looking anywhere but yourself. If you're the Reserve Bank, you're pointing the finger at yourself and with the other hand saying, 'It's got nothing to do with us.'
"There's a lot of finger pointing going on."
'No other option'
Olsen says it doesn't really matter whose fault it is; what matters is what's being done - and no one is making major inroads.
"From a finger-pointing point of view, and if we do want to play the blame game, I think this is a question of unintended consequences on one hand but also of the bluntness of some of the tools we've been able to utilise," he says.
"It's undeniable that interest rates going substantially lower, coupled with taking off LVR restrictions, has brought an incredible amount of heat into the housing market, with every man and his dog trying to buy a house and probably as many as they can justifiably get.
"We've seen that both in terms of just general lending but also in terms of some of those riskier loans coming through in terms of investors."
The Reserve Bank, says Olsen, has done exactly what it was asked to do.
"Their mandate does not extend into pure targeting house prices."
'We should be making development easy'
Olsen puts the blame on successive governments neglecting to ensure houses are built at pace and scale.
"The real blame I think should be pointed at the regulations that stop anyone from moving ahead in the housing market. We should be making development easy, not this process you want to give up at every single hurdle that's put in front of you."
Covid-19 is also a factor, he says: "The Reserve Bank needed to provide substantial amounts of stimulus to support the economy. The indirect effect of that was interest rates were lower and people were looking where to put their money, both in terms of where to get a return and where to avoid not getting a return.
"People were saying, 'Look, I want to make some money but I'm not getting anything from my term deposit or my bank so I need to find a better yielding vehicle and housing is that vehicle'."
Follow the (cheap) money
OneRoof columnist and former Property Institute of New Zealand chief executive Ashley Church thinks people will look back on 2020 and blame a combination of investors and the fall in immigration - but the real cause is the low cost of money.
"It's the fact that money's getting cheaper and the messages from the Reserve Bank is that the cost will stay down for a long time and that's giving people confidence," he says.
And in a sense, that makes the Reserve Bank the bogeyman.
"It's the Reserve Bank that's obviously sending the signal to the market that rates should come down and it's doing it for reasons that are unrelated to property – it's doing it because it wants entrepreneurs to borrow money from the bank and fund productive activity. But it can't differentiate between the two, so a lot of it is spilling over into property investment and that will continue."
Church stops short of blaming Covid-19, saying property cycles mean the Auckland market would have taken off next year anyway.
"In that sense the increase in property values in Auckland is basically a year ahead of itself and in that sense I think we can blame Covid, in that the Reserve Bank has responded to Covid with these lower interest rates and that's what has fuelled the growth."