1: Mortgages drive house prices. Individuals bid up to the limit that they can afford the repayments. We had an earthquake in Christchurch and uninsured homes went for half the price of insured homes (because mortgages unavailable on uninsured homes).

2: House status upshifting drives people to earn more (once they are on the property ladder). I suspect large parts of the professional economy is driven by people wanting nicer houses. Status matters.

3: Property taxes depend on location. In Christchurch the property (council) taxes have a total budget that is then split depending on price. So your taxes go up if your house valuation increases compared to rest of market.

Above are my opinions based on what I have personally seen

The wealth is an illusion, to end up reduced by insurance, property taxes, climate risk costs, diminished demand, etc. Similar to an inflated unicorn valuation based on hope and sentiment.

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