Bernard is fishing for another "dicky crystal ball" award?

People have been dissing house ownership as a bad investment forever. I even remember Don Brash, when Governor of the Reserve Bank, advising people to rent rather than buy. That was immediately followed by the spectacular appreciation of NZ Housing.

I suspect economists and financial analysts have never really understood property and asset appreciation. Both are subject to too many cycles and exogenous factors to fit their short term certain linear financial models.

What happens:

if interest rates actually drop? VERY UNLIKELY
if the govt leaves property alone? POSSIBLE
if net migration gains massivel VERY UNLIKELY
if not enough new homes are built to keep up with demand? UNLIKELY
if RMA changes are slow to be enacted? POSSIBLE
if personal tax rate is lowered? POSSIBLE, BUT WILL ONLY OCCUR WITH CORRESPONDING PROPERTY TAX THEREFORE HAVING NEGLIGIBLE POSITIVE IMPACT ON HOUSE PRICES
if 20,000 people are accepted for the new business migrant scheme? VERY UNLIKELY
and a Rugby World Cup feel good factor? STILL MORE THAN A YEAR AWAY AND WHAT HAPPENS IF WE LOSE AGAIN

Matt in Auck -a few possibles in there mate!

Lots of talk of a double dip and the $USD slumping = lower interest rates

What about lower personal tax but offset with higher GST

Takes many months/years to pass major new laws such as new RMA

18,000 have already applied for the new business scheme that grants instant residency

Whether or not we lose RWC will not matter the buzz during the build up to it should keep us pumped for the next 18 months

mmmmm, tasty
I'm not going to make any firm predictions! But I doubt we'll get to even 15K this year:

- More kiwis will start emmigrating again as prospects overseas, esp Aussie, improve
- Fewer kiwis will return as things get better overseas
- lack of jobs here plus unfavourable exchange rate will deter immigration

And to show I'm not a total house price decline fanatic - I think Bernard's video is excessively gloomy ,the way he is talking its as if he sees 10% plus declines
I expect things to be pretty much flat, maybe falling 2-3%

The average net gain for the past decade has been an inflow of just over 12,000 people. In the year to November the gain was 20,021 and looking at the monthly
seasonally adjusted numbers this total may peak around 23,000 or so.

http://www.bnz.co.nz/binaries/w210110.pdf

You guys may be sarcastic towards BHs 30% predictionS...his time frames maybe out a bit, but hey they where over near a decade.
"The show is not over till the fat lady sings"
And none of you would agree the show is not over yet, by a long way.
I can see BH leaning back in his seat, a quiet confident smile on his face, and the day will come he will be right...his prediction maybe a bit off time wise but overall they where for about 10 yrs.
10yrs are not up yet, its premature to judge.
Then who will be looking like those economists that you all get stuck into?

A question for the ''bank manager''
MREINZ: There were almost 5,000 house sales for December last year.
MREINZ: Prices increased from $355,000 in November up to a national median of $360,000 in December.
Observation: Add to 5,000 sales, just 25 extra sales at $2.5million, that increases the median from $355,000 to $360,000.
Query: Are prices actually going up or were there just 25 more higher priced properties sold in December? Are there more higher priced properties reaching stressed stages?
Conclusion: The median is most misleading. Economic factors have a greater effect on the median than actual price changes.
Query: What is unknown to me is, when all the higher priced properties avoid bank foreclosure by stressed selling, when that has finished, will the bottom fall out of the market median?

Miles - those are averages, not medians.

IanC,

re RWC. Completely agree. No rational reason for houses to be affected by more people in the country for 5 weeks. A little bit of extra rental, and maybe some extra interest in the country but this dissipates quickly. Maybe we get an additonal 10% of visitors in RWC year - guess what? they have half as much cash in NZD terms that they used to have.

ANd to extend the logic, maybe we may suffer a mini Football world cup hangover this year - ie for every NZerwho goes over there there is less money spent in the country and potentially some ppty purchases taking money away from the NZ REA market. My wife has an apartment in South Africa, expecting it to triple over the course of a few weeks. Then I can take the money out and buy in NZ and triple my money again in 2011. Its just too easy. Then London for the Olympics. GUARANTEED gains.

Roger et al

My current forecast is for a 15% fall in house prices from their late 2007 peaks.
Hasn't changed since last year. Still comfortable. Last year's bounce was an Indian summer. We're seeing that now.

cheers
Bernard

Trev,
Good idea. We do polls regularly.
Let us think about how we can do that within our publishing system.
cheers
Bernard

Punxsutawney Bernard : It is groundhog day ! Are you seeing housing bubble shadows again ? Or is it another 6 weeks of the ponzi-scheme property boom !

Have a gummy bear ! Just 'cos you're such a good sport about the 30 % prediction . And I may be the one to look daft by year's end , if the Minsky Moment occurs , and scuppers my prediction of Goldmoney Sacks stock reaching $US 250 .

Grand to hear you with Jim Mora on Radio National , yesterday .

BERNARD : 1000 apologies o' great camel inseminator of the internet . Suffering brain fade ! Mistook " interest rate rises " for OCR . Got BOLLARDs on me brain . Yes yes , of course . The market is working nicely - supply & demand - as is does when pollies & central bankers keep out of it . Bolly's OCR has no effect at this juncture . Banks are chasing savers for dosh , and bidding up term deposit rates . Of course .

As atonement I shall use my bare hands to clean up the entrails from our local frog-explosion laboratory .

Bernard,

Were you talking in nominal or real terms?
In real terms house prices had taken a 15-20% hammering peak to trough.
With domestic inflation (the only one that matters day to day) running at close to 4% most of the time, if house prices stay flat for 4-5 years your talking a 20% drop in real terms.
2002-2003 was almost a perfect storm for house prices. 4-5 years of low price growth leading into this period meant relatively affordable housing was met by low interest rates (post 9/11), surging immigration, and a low exchange rate.
Add to the mix investors fired up by high tax rates, rapidly gaining house prices and Robert Kiyosaki, and there was only one direction for house prices to go. Up.
Most of these factors are no longer with us (or soon won't be) so it is very difficult to predict any sustained house price growth. Stagnated growth is the best to hope for until inflation makes houses more affordable in real terms.
I've always found it strange that while people are very loath to make a nominal loss they are more than happy to take a real loss.