Falling house prices and rising inflation drive real house prices sharply lower

Property / analysis

In real terms, Auckland housing is in a bear market having fallen more than 20% since a peak 10 months ago on an inflation adjusted basis

20th Sep 22, 11:31am by David Chaston

Source: 123rf.com Copyright: Elnur

When inflation is low, its impact on changes to house prices is low. Nominal changes like demand and supply pressures are the main influences.

But when inflation is high, it masks the 'real' rise in house prices. Mortgages are always nominal and are always repaid in nominal terms, but asset prices do get set with some reference to inflation levels.

Community discussion of house price changes has avoided reference to "real" inflation-adjusted changes, focusing instead on "nominal" prices which are unadjusted for the likes of seasonality, inflation or other modifiers such as interest rates.

From 1995 to 2020, a quarter century span, inflation averaged only 2.0%, peaking only very briefly in this period at 5.3%.

But inflation has suddenly risen well above that level. It hit 7.3% in the June 2022 quarter and it could come in higher in the current September quarter when these levels are reported in about three weeks.

For almost all those 25 years, house prices have been rising, in nominal terms at least. Sure they flatten out, even dipped minorly in 2008, but that didn't turn out to be much of a correction. Certainly at that time inflation remained modest.

But recently we have a unique situation: house prices are falling and inflation is roaring. The combination eats away at 'real' house prices quickly.

The following two charts paint the picture. We have set January 2012 as the base, being a 10 year timeframe.

Nationally, nominal house prices were down 5.9% in August from year ago levels. But on an inflation-adjusted basis the decline is down 16.5% from a year ago.

Over the past decade, after inflation, median prices have risen from $355,000 to only $595,100 in 2012 dollar terms. We see $800,000 as the median price if we ignore inflation.

Most of this impact has been since the start of 2022. Not only have house prices retreated since then, inflation has jumped to levels not seen in a generation or more.

The impact in Auckland is even more pronounced.

The 8.3% retreat in August house prices from August 2021 isn't something we have seen for many generations. From the November 2021 peak, the decline to August has been 15%.

But when you adjust for inflation these changes are much more. On a year-on-year basis Auckland house prices have retreated 18.6%, and from the November peak they are down 23.1%.

By conventional definitions, Auckland housing is in a fast-building bear market.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

97 Comments

by DDDDebt | 20th Sep 22, 11:36am 1663630609

David - you should dig out and include Miguels graph - it’s a real beauty!

by xingmowang | 20th Sep 22, 11:37am 1663630649

Time to buy around mid 2023

by SND | 20th Sep 22, 11:41am 1663630890

I'm afraid sellers will still not be ready.

by JustAnOpinion | 20th Sep 22, 11:42am 1663630965

I agree, House Mouse has also called this as the turn.

by jimmyH | 20th Sep 22, 11:52am 1663631528

As we had a double peak ,end 2019 ,end of 2021, and as mortgage interest rates are likely to stay higher for longer, coupled with real reductions in borrowing ability,and lower after tax earnings( net -of-tax wage increases) buying less ,in an extended inflationary environment,my pick would be a 4 year dip. Real ,inflation adjusted median house values might come back 40 %, easily enough.

by Mr Ed | 21st Sep 22, 2:22pm 1663726976

😂😂

by Nifty1 | 20th Sep 22, 11:44am 1663631086

Jump in and buy when everyone else is or try and pick up a deal now?

by Iceman | 20th Sep 22, 11:56am 1663631791

@nifty I’ve always bought when I had the means to because I am in it for the very long term. There is no one, and I mean absolutely no one who can time the market. You only realise a few months later that “that was the peak” or “ that was the bottom” Just waiting for all the people who haven’t invested in property but know everything about it to now tell me I’m crazy….brace yourselves.

by lucenera | 20th Sep 22, 12:21pm 1663633301

define very long term.

10 years

25?

50k years?

There is no one, and I mean absolutely no one who can time the market. <= you don't know that, this market is easily predictable. The bottom is when inflation is under the "neutral" value and central banks move to neutral OCR.

yes, if you buy now you are crazy, but well... your money, not mine

by Iceman | 20th Sep 22, 12:50pm 1663635000

@lucenera I suppose you've made fortunes predicting markets and calling everyone else crazy?

by lucenera | 20th Sep 22, 1:06pm 1663635988

I answer you: No, I didn't make a fortune. Yes I made some money in making predictions (I made a couple in this very place that resulted pretty accurate). I don't call everyone else crazy, I said that you are crazy if you buy an house now (unless of course is a hugely obvious good deal)

Now please answer my question. What you mean by "very long term" ?

Because I feel that you don't have any idea (pretty much as anybody else mentioning this mythological long-term)

My prediction: at least -37.5% in 18 months since the last November.

Feel free to write it down

What is your one?

by Iceman | 20th Sep 22, 1:26pm 1663637160

@lucenera, that exactly is my point - I can't predict what is going to happen in the next year or two and it's basically all noise to me. If your prediction is correct, I still won't be affected too much mentally as I'm cognizant of the unreal gains I've made since the pandemic. I never expected that to be sustainable.

by lucenera | 20th Sep 22, 1:32pm 1663637531

you still are not saying what you mean by "very long term"...

by tothepoint | 20th Sep 22, 5:36pm 1663652198

Lord Maynard, the eminent British economist said that, "....... in the long term we are all dead".

TTP

by lucenera | 20th Sep 22, 5:43pm 1663652597

lol, yeah, that's exactly the point :D

by John2 | 23rd Sep 22, 10:31pm 1663929072

or it could steadily decrease and remain flat for 4 + years.

No one knows

How do you know it will end in 18 months?

by Idoubtit | 20th Sep 22, 1:25pm 1663637142

This market is easily predictable?! Wow, what a naive comment.

by Iceman | 20th Sep 22, 1:27pm 1663637236

@idoubtit doesn't make one sound very intelligent correct?

by lucenera | 20th Sep 22, 1:43pm 1663638185

Intelligence is overrated

What I stated in not intelligent or smart, is obvious.

Rates up, Houses down

Rates down, Houses up.

Yes, easy to predict (is not even a prediction actually)

by John2 | 23rd Sep 22, 10:33pm 1663929236

https://investfourmore.com/interest-rates-housing-prices/

by theglc | 20th Sep 22, 3:02pm 1663642968

The problem is, its not a true "market" is it!

For the most part govt & RB intervention drives the outcomes they want to see, an for the past 20 years that has been to drive housing prices up out of step with other fundamentals.

Now we have exaggerated inflation and the govt and RB are unable to intervene without wiping out the wealth of the country.

I tend to agree that once inflation is heading in the right direction and interest rates stop climbing house prices will stop falling within 6-12 months. prices will probably be flat for a while and start rising once the OCR comes back down.

Hard to predict when that will be as this inflationary burst has a mind of its own. If I was to pick right now, I would say bottom is likely to be end of next year and prices will have dropped 35% from peak by then.

by Spiceeh | 20th Sep 22, 6:25pm 1663655133

The end will be when China/Russia/Iran/Venezuela win or loose the unipolarity/multipolarity competition with the US. The co-operative would win the moment it is forced to cut off all western allied countries from Chinese import and export markets while Russia cut off all western allied countries from it's exports. Shake and stir for 3 months and call it OVER22. Biden seems to think Taiwan is worth not sharing it's chips.

by Joe Smith | 20th Sep 22, 12:32pm 1663633945

@iceman: You're right, of course, about timing the market. And, if you take the last 20 years or so as a guide, you're likely to think (like, e.g., Bernard Hickey) that there is a political consensus within NZ to protect house prices and so we are unlikely to see them fall much further.

OTOH, if you think we're facing an unprecedented combination of factors (rising interest rates, recent law changes on property investment, massive inflation, etc.), combined with fundamentals (income/price ratios) that still make housing massively unaffordable for many NZers, you might think that prices still have much further to fall.

So, I don't think you're crazy. But I don't think you should regard the alternative view as crazy either.

by Iceman | 20th Sep 22, 12:57pm 1663635469

@ joe smith yes and no, there are other factors at play too namely supply and demand when immigration does eventually pick up (again thinking long term) Also, Auckland is not to dissimilar to Sydney, Melbourne and other major global cities with our property markets. I'm just wondering if people are actually expecting all those markets to crash too? And just FYI before anyone twists my words around, I'm not expecting rises any time soon.

by rastus1 | 20th Sep 22, 3:35pm 1663644913

All assets are about to ‘reset’. Not just nz and aus housing. If you’re leveraged...bad luck.

by sparrow | 20th Sep 22, 3:51pm 1663645905

The aggressiveness of the RBA’s monetary tightening has prompted Jo Masters – chief economist at Barrenjoey – to forecast a record 16% peak-to-trough decline in national dwelling values, with Sydney prices to fall 25%:

Ms Masters said on Monday the central bank will cause a recession if it raised rates as aggressively as markets expect… [They] expect the cash rate to reach 3.3 per cent by the end of the year, before peaking at 3.9 per cent in April next year…

Barrenjoey expects the RBA to stop raising rates once the cash rate hits 2.85 per cent, well below consensus estimates and just 0.5 percentage points above its current level.

Ms Masters said a 2.85 per cent cash rate was consistent with a 25 per cent price fall in the “very leveraged” Sydney property market and a 16 per cent dip in values nationwide.

“It will be the largest and the longest house price correction in modern history.

by Spiceeh | 20th Sep 22, 7:13pm 1663657985

I'll take 16%, but I doubt that is the bottom, for the RBA and RBNZ have no choice to stop raising until the Fed stops. The Fed and its bankocracy will do whatever it thinks is necessary to hold the dollar hegemony, even if it kills millions at home and billions abroad.

All the optimistic thinking won't stop the WW3 we are heading into. Read up on the conditions around the globe in the 1920's and 30's, especially within Germany and Britain, the parallels will scare the living shite out of you. America was happy to let WW2 happen. They allowed their oligarchy to fund and support the Nazi's while tinkering in the politics of the region, ensuring the chaos would gain them the economic advantage at the other end. They are willing to attempt to do it again now.

BUT this time China is wealthy with commodity allies that allows them a level of self sufficiency. Their population is massive, educated and hard working, something that the west has allowed to weaken in themselves. China's militarily is now more than compatible in a bitter fight with NATO allies and they have built military allies in Russia and Iran who also are highly capable. NATO allies have been economically, industrially and militarily weakened through this conflict with Russia. China is standing with Russia not against it this time too, they know it's existential for them both. The west have oppressed and pushed away too many commodity rich nations and left them on the brink, and they are finding it an easier task to band to support the industrial powerhouses of the east who've been coming to their rescue.

The advantage does not appear to be in the US's favour this time around, I feel they may have overestimated the strength of their allies and underestimated the strength of their competition.

by Juzz | 20th Sep 22, 4:42pm 1663648961

When immigration picks up? you can't see a correlation between house prices and interest rates yet you can predict migration flows?

by Mr Ed | 21st Sep 22, 2:21pm 1663726909

So profound …

by Blackdog | 20th Sep 22, 11:45am 1663631141

The cost of building houses is going up. It is the land under them that is dropping in value

by JimboJones | 20th Sep 22, 11:55am 1663631717

Its the fake speculative demand that is dropping. That can affect both land and (existing) building prices.

by theglc | 20th Sep 22, 3:05pm 1663643153

Once there is competition for work, you will be amazed at how the cost of wages and materials can magically drop

by Final Account | 20th Sep 22, 4:54pm 1663649684

It'll be margins compressed. Wages will remain high. Materials will remain high.

by Joe Smith | 20th Sep 22, 11:52am 1663631538

Houses may be falling in real terms, but even with recent falls, prices have risen much more than household incomes. So, they are still massively less affordable, in real terms, compared with 10 years ago.

According to the chart in the article, since 2012 median NZ house prices have more than doubled in real terms. By comparison, median NZ household income has increased by less than 50%:

https://www.ceicdata.com/en/new-zealand/annual-household-income/median-…

Based on fundamentals, house prices may have much further to fall.

by JimboJones | 20th Sep 22, 12:06pm 1663632400

But it is actually possible that house prices could come back to 2012 affordability without a massive crash, we just need to keep that inflation rate up!

by meh | 20th Sep 22, 12:25pm 1663633548

We had housing affordability issues in 2008, was that solved by 2012 or was it just hidden by the illusion of loan affordability?

by j reacher | 20th Sep 22, 12:34pm 1663634076

BBBBaby You Aint Seen NNNNothing Yet"

by Prickle | 22nd Sep 22, 12:46pm 1663807561

Or perhaps we accept that wages need to increase.

by chebbo | 20th Sep 22, 11:55am 1663631716

It would be interesting to see how real house prices are tracking compared to nominal prices, but unfortunately this article doesn't show us that. CPI is being used in the wrong way here; the correct measure to use would be M3, which the RBNZ stopped reporting on years ago.

Real house prices don't fall because the price of tomatoes goes up, even if that causes an increase in the CPI.

by J.C. | 20th Sep 22, 12:31pm 1663633910

Real house prices don't fall because the price of tomatoes goes up, even if that causes an increase in the CPI.

Lover your work Chebs. We're on a similar plane.

by theglc | 20th Sep 22, 3:07pm 1663643259

I agree, its only against wage inflation that matters

by Alec | 21st Sep 22, 6:56am 1663700218

Not sure you have seen the price of tomatoes recently !

by Independent_Observer | 20th Sep 22, 11:54am 1663631676

Great work David - it would be interesting to see the national median house price chart, adjusted for inflation, over a longer time series. Say 20-30 years so that extent of the bubble, in real terms, can be put into perspective.

I don't think many people can see it for what it might be.

For example, if you combined it with the data from this article (if you still have it).

Real house prices down most since 70s | interest.co.nz

by fortunr | 20th Sep 22, 11:58am 1663631914

A long way down still to go. I expect another 20% drop in real terms, as interest rates increases have not really started to bite yet, and we still have a bunch of delusional specufestors ignoring economic reality and clinging to unreal expectations. Once house prices have decreased by approximately 40% in real terms, then we can start thinking about the market reaching sustainable and affordable levels.

by JimboJones | 20th Sep 22, 12:09pm 1663632581

It will come down to whether new building drops off a cliff or not. We still do have a shortage of houses that needs to be rectified before we can start thinking about the market reaching sustainable and affordable levels

by foreverimmigrant | 20th Sep 22, 3:58pm 1663646288

There is 30000 unoccupied properties in Auckland according to census. Very soon many of them will be released to the market.

by NZGecko | 20th Sep 22, 7:01pm 1663657262

Released like the Krakken angry monster.

A number will be owned offshore in Asia - these fellas will need to abruptly "meet the market" and get the ready cash out, as their own economies go down the gurgler.....

by Juzz | 20th Sep 22, 4:54pm 1663649685

Shortage, I've seen plenty of unoccupied open homes lately. Many empty for months and no interest even at the current reduced prices.

by Richardfromauckland | 20th Sep 22, 6:08pm 1663654109

What sort of area Juzz? I went through a 2brm art deco flat in Mt Roskill/Sandringham on the weekend - asking price 1.165... I imagine the owners will hold out for something around that mark as they only bought it a year ago for around 1.13. Another in the block sold recently for a decent price. I wonder if centralish Auckland is holding up?

by Juzz | 20th Sep 22, 7:14pm 1663658048

Wellington region. If they bought it a year ago they're going to need to take a loss or hold it. I would say yes there are still some buying out there not paying attention and the odd sale going through. We went to an auction and a family of what I presume are recent immigrants bid themselves up a hefty price against the agents, no other buyers were bidding. I guess they saw how much prices have been reduced already and they felt like they were getting a bargain.

Someone on here also posted this property asking 365k less than they bought for this year, not a house I'm looking at btw as it's still overpriced.

https://homes.co.nz/address/wellington/island-bay/54-severn-street/DLJkr

Sold 2019 for $689k, then in 2020 $1.31m, then 2022 for $1.74m now asking 1.375m. All sales the same agent too

by Juzz | 20th Sep 22, 7:20pm 1663658447

I realize this property has likely had some capital improvements during this period, however, I doubt it was in the region of 600k worth.

by Richardfromauckland | 21st Sep 22, 7:13am 1663701180

Yep. complete madness.

by J.C. | 20th Sep 22, 12:33pm 1663634029

I expect another 20% drop in real terms, as interest rates increases have not really started to bite yet, and we still have a bunch of delusional specufestors ignoring economic reality and clinging to unreal expectations.

It's all about nominal in my books. That's the only way that the sheeple are psychologically impacted. People don't think about prices in "real terms."

by Property_Wizard | 20th Sep 22, 1:41pm 1663638100

Maybe, but it also goes the other way with nominal wages increasing.

by J.C. | 20th Sep 22, 2:28pm 1663640907

Maybe, but it also goes the other way with nominal wages increasing.

Possible. But it doesn't make much sense in terms of human behavior. If incomes are going nowhere (and that is the reality except for marginal increases), how does it make sense to pay more?

by gnx | 20th Sep 22, 12:57pm 1663635439

why should they stop falling at forty percent?

half the investors lose money.assume another quarter barely make some income

you can value them at anything you like but what will happen if people can get 5% or 7% term deposit rates

and interest is costing 8%-10%

and stress testing at 10%-14%

thats the edge of the cliff I see getting closer and closer

who's going to buy a house when they go down 40% and three quarters of investors are making losses twice as large

why would you?

by GV 27 | 20th Sep 22, 1:41pm 1663638071

why should they stop falling at forty percent?

I don't disagree with the likelihood of us hitting a cliff in terms of drop-off, but there's going to be a pretty chilling effect on discretionary spend and the industries that rely on it.

by OldSkoolEconomics | 20th Sep 22, 3:04pm 1663643082

Until there is a significant drop in all spend (and thus inflation) and the employment rate drops (taking pressure off wage rises)... then the central bank rates and thus mortgage rates will keep rising.

The reserve banks need the economy to falter and go backwards a bit... before they think about taking their foot off the rate rise pedal. its not enough that inflation drops slightly to 5% or 6% for a bit and employment doesnt rise much again.

For that to happen i reckon we need another 5-6 months of rising rates.. maybe 5% ocr by then. Business start to feel the effect of reduced discretionary spend and lay off some staff... people accept house prices are 40% down and some need to move so trade houses at that level.

by Caughtinthemiddle | 20th Sep 22, 5:35pm 1663652117

100%

The latest data that showed GDP on the up, coupled with persistently high employment and inflation was bad news for anyone hoping for respite from OCR climbs.

Don’t get me started on the NZD and US monetary tightening.

by morepork | 20th Sep 22, 3:17pm 1663643876

1 year term deposit rates were just shy of 9% at the end of 2007. We could easily hit that again.

https://www.interest.co.nz/chart/investing/term-deposit-rates

by whakahokia mai | 20th Sep 22, 12:40pm 1663634423

Would love to apply this methodology to section prices around the country. To see whether these track house prices at all.

by taimaiakka0 | 20th Sep 22, 12:45pm 1663634726

From the November 2021 peak, the decline to August has been 15%.

This fall should stop now as another 10% to 15% and bleeding will start as the bandage has been successful in holding the bleeding till now but cannot gurantee the outcome if the fall continues.

by DTRH | 20th Sep 22, 12:49pm 1663634964

The bottom of the market will be hit when average wage couples can afford to buy. At the moment only around 5% of population can afford to buy a average house in Auckland from scratch. So house price’s will heading down for a while.

by Iceman | 20th Sep 22, 12:56pm 1663635380

@DTRH, where are you getting 5% from? Also, Auckland is not New Zealand, affordability is somewhat better is other cities.

by gnx | 20th Sep 22, 1:09pm 1663636166

Iceman

I think as high as 90% of fhb's were using bank of mum and dad to stump up the deposit or assist

the reason its this high is because 90% of fhb's couldn't save a deposit

and if they couldn't save a deposit from income when renting then what income are they going to use to pay higher mortgage rates?

remember bank of mum and dad used a few emails to the bank, a chat with the solicitor and an agreement to use imagined up "equity" in many cases

but now you have to stump up with actual cash every fortnight

tough for those that "helped" the kids into homes when they all come running at once

its the same scenario with investors who used the imagined up "equity" in their own home

where do they find the cash to pay the mortgage increases coming

some will, some wont

its going be brutal for many.

by GV 27 | 20th Sep 22, 2:02pm 1663639344

I have significantly less sympathy for property investors trying to leverage taxpayer underwriting of finance costs into tax-free gains on assets than I do for FHBs, many of whom would simply have stretched to buy a modest family home.

One of these groups of people has a lot more of a case to answer for in terms of spiking our property prices for the last decade and a half than the other.

by K.W. | 20th Sep 22, 6:06pm 1663653960

I'm not so sure that the Govt paying $2000 a week to house people in motels or spending billions every year buying/building houses is cheaper than allowing private investors to offset their interest costs against their gross rent for providing the same rental accommodation. If you want people to be housed, someone has to pay for the housing. Is it the Govt using the rest of us tax dollars, or private investors using their own money?

by RickStrauss | 21st Sep 22, 10:52am 1663714370

Liberalise zoning and raise LVT on the unimproved value of land and watch the problem fix itself. And unwind welfare subsidies for landlords.

by DTRH | 20th Sep 22, 2:46pm 1663641999

Iceman around only 5% of New Zealand population earn the required income to buy average house in Auckland from scratch. The income needed to buy 1.2 million house would be around 300k at 4 x income you would also have to have deposit, only 5% of population in New Zealand fit into this category. 1.4 million would just about get you a average house in Auckland other areas in New Zealand are a lot more affordable but over next few years everywhere will be 50% to 60% less so just hold on the longer you wait the smaller the debt will be. Now Iceman if you don’t understand this go and see a financial advisor I could of made a small fortune for you if I was charging.

by Iceman | 20th Sep 22, 5:34pm 1663652091

@DTRH no need to get your panties in a knot mate, was just asking what your source of 5% was. Also why are you saying 5% of Nz population can buy a house in Auckland. Your avoiding my point about buying in other cities. Regarding financial adviser- perhaps if you knew my position you’d think differently ;p

by taimaiakka0 | 20th Sep 22, 1:01pm 1663635708

Listen to the expert, eternal optimist

https://www.oneroof.co.nz/news/ashley-church-is-nzs-housing-market-real…

by HouseMouse | 20th Sep 22, 3:38pm 1663645125

Wow

by kiwimm | 21st Sep 22, 10:45am 1663713942

Don't look up

by Dale Smith | 20th Sep 22, 1:09pm 1663636182

You could have summed it all up by just referring to the median income to house price multiple which takes in inflation and house price rises or falls automatically within the ratio.

And the ratio according to your data, NZ median income multiple has fallen from 8.9 to 8.17, and Auckland from 12.02 to 10.76.

Why don't you extrapolate the trend going forward of falling house prices and interest rates to see over what time frame it would take to get to a more affordable multiple, updated of course as you go.

by kiwimm | 21st Sep 22, 10:51am 1663714282

You can have a play with the Taylor rule here. It is predicting around 6.5% for the Fed Funds Rate (depending on your assumptions) vs it's current setting of 2.5%.

https://www.atlantafed.org/cqer/research/taylor-rule?panel=1

Implications for NZ is that our rate will need to go at least 2% higher than this.

by gnx | 22nd Sep 22, 11:03pm 1663844631

12% interest rates......

16% test rates

yeah that will get the house prices back to three times income

yikes

70%+ falls in Auckland

by Independent_Observer | 20th Sep 22, 4:27pm 1663648060

Its obviously not zero...but its obviously not going to happen in the next 12 months. But in the next 5-10 years. Yeah, now that is a possibility.

The probability of an OCR of 4% was zero according to many commentators here last year....but now its more or less a certainty...perhaps even 4.75-5%.

So I guess the moral of the story is, who knows what is going to happen.

by K.W. | 21st Sep 22, 11:55am 1663718108

The number is gently being massaged higher in the media. From 4%, to 4.5% and now 5% is being whispered. Give it another 6 months, and it will be 5.5% then 6%....

by phalanax | 20th Sep 22, 1:36pm 1663637773

Hard to know how to frame it...but some folk might actually have to work to generate a profit instead of relying on CG's....Hard times for some...good news is plenty of jobs around...lol

by dumbthoughts | 20th Sep 22, 3:00pm 1663642854

Ewww yucky running an actual business or investing in productive enterprise? No thank you.

by Antz | 20th Sep 22, 1:46pm 1663638385

Does anyone know where I can buy one of these 'inflation adjusted' houses?! ;-)

by Fluffybunny | 20th Sep 22, 4:26pm 1663648016

Probably at the same place you can get an inflation adjusted pay rise... 😋

by Averageman | 20th Sep 22, 5:38pm 1663652322

Requires an "inflation adjusted" seller. Most are still stuck in expectations from last year.

by Zachary Smith | 20th Sep 22, 1:51pm 1663638665

My banking app reckons I have lost 100k on property in a month.

by Independent_Observer | 20th Sep 22, 2:45pm 1663641957

Ashley Church would point out that this is only a $1.2 million drop if it continues for 12 months so nothing really to worry about if you look at this over the long term.

by David6766 | 20th Sep 22, 3:06pm 1663643211

Not sure what the fuss is about. A house is a house, either a roof over my head or a revenue stream to my pocket. The market value is irrelevant unless I'm selling.

Inflation goes up, wages go up, rents go up. My mortgage stays the same or goes down. Just have to wait a few years for the market to balance things out

Inflation is great for property owners who can afford the interest payments in the mean time and might usher in a golden time of positive cash flow on leveraged property investments once more.

by Juzz | 20th Sep 22, 7:25pm 1663658701

Inflation is not great for anyone, particularly investors. Unless of course you liquidated your assets during the peak last year and are sitting on the sidelines waiting to buy. By the sounds of your spruiking you didn't, but that's fine, denial is just a stage and acceptance is not far down the track. Best of luck

by Wrong John | 20th Sep 22, 3:17pm 1663643854

I stopped going (putting it) up in mid-winter 2021 - July if my memory serves me. It was all driven by fairy dust so I stopped believing it & as a result, today, the balance sheet is still in reasonable nick. Indeed, it hasn't changed a lot for the last 3 years as the businesses took a hit the same time as the fairy dust was being sprinkled. Going forward this will 'settle down' hopefully, so I'm picking another 12 months of 'rebalancing.'

Long term, we're boomers with succession in place, so will still need to grow the businesses from here to keep up with the Jones.

By the Way: We do not have a housing shortage in NZ. We have a shortage of suitable accommodation for our growing welfare classes. There are thousands of empty houses out there with no one living in them because their owners don't want anyone living in them. I will be watching the North Asian situation carefully as many of our empty homes are Asian owned, and with things starting to get ugly over there, they may well need their offshore investments a little closer to home over the next 12-24 months.

PS: The construction industry is probably not one to invest too much in over the coming year. Maybe longer.

by RickStrauss | 21st Sep 22, 10:55am 1663714554

Most of our welfare class are pensioners. Over 50% of our welfare budget. On top of that, the welfare subsidies to landlords. But yes, the retirement resort industry is also on top of that, proclaiming a shortage of suitable accommodation for that welfare class and a plea for more taxpayer subsidies.

by foreverimmigrant | 20th Sep 22, 3:59pm 1663646398

Has The RBA Greenlit Home Price Falls?

https://www.youtube.com/watch?v=AQtO-xrjGoA

by K.W. | 20th Sep 22, 5:44pm 1663652684

Fortunately the NZ$ is falling even faster, and the Labour Govt is handing out residency visas like lollies on an Air NZ plane, so the price of NZ real estate is getting cheaper and cheaper for foreign buyers. And the immigration tap has just been turned on full bore. Don't panic. While there might be a lot more homeless New Zealanders soon, the prices of NZ housing should stabilise once the wall of foreign money hits the auction rooms.

by Juzz | 20th Sep 22, 7:29pm 1663658992

But do the foreigners want to come here, Australia just opened up their floodgates with higher wages and lower house prices. People seem to forget many who immigrate to NZ plan to use us as a stepping stone to get into Aus. Now our cost of living is up, the industries we want to attract are not competitive, houses are overpriced and interest rates are climbing. So apart from our low dollar to theirs wheres the incentive?

by Yvil | 20th Sep 22, 5:47pm 1663652868

You could also add the devaluation of the NZD to show how much more, NZ house prices have reduced on an international basis, add about 12% devaluation! Now the bear market is nationwide and down over 35% in Auckland !!! Surely that's even more spectacular!

by Eschaton | 21st Sep 22, 7:38am 1663702685

Inflation adjusted or not, fiat currency if clearly a fake construct. Even the physical notes are soon to feature the portrait of a fake king.

by The Scribe | 21st Sep 22, 8:22am 1663705377

Most of the comments on here are very NZ focussed, and often housing focused, with very few looking what is happening in Europe and Japan. Here is an example...Germany is on the brink of collapse, Japan following. If they go down, we all go down, and far more than a housing crash....deep long recession, or worse...the D word. Bank failures even.

https://www.youtube.com/watch?v=7xGN2AF5TjQ

by balance | 21st Sep 22, 9:20am 1663708807

Im sure first home buyers are to blame

by Mr Ed | 21st Sep 22, 2:24pm 1663727061

Beep Beep I’m not a sheep