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Greg Ninness asks whether the suggestion that house prices double every 10 years is an urban myth or fact

Greg Ninness asks whether the suggestion that house prices double every 10 years is an urban myth or fact

By Greg Ninness

House prices double every 10 years.

It’s a phrase that’s often quoted, particularly by people with an interest in promoting property as an investment.

But is it true?

Unfortunately the answer is a resounding “that depends.”

Between June 2010 and June 2020, the Real Estate Institute of New Zealand’s median selling price increased from $352,000 to $639,000, an increase of 81.5%.

Okay, so the median is an indicator of where the middle of the market is, but what about the bottom end of the market that’s generally of most interest to investors and first home buyers? Over the same 10 year period, the REINZ’s lower quartile selling price increased from $253,000 to $452,000, up 78.7%.

That suggests that the bottom and mid-priced segments of the residential property market both increased at a similar pace over the last 10 years, and that prices increased overall by around 80%. Not quite the 100% that’s required for a doubling of prices, but not that far off it either. So would it be more accurate to say that house prices more or less double every 10 years?

Again, that depends.

Looking more closely into the figures, there were some big regional variations. The regions with the lowest median price gains over the decade were Canterbury/Westland +43.4% and Taranaki +47.4%, while the biggest increases were in Otago +111.5% and Auckland +107.1%. The other regions with gains above 90% were Manawatu/Whanganui +98.9%, Bay of Plenty 98.8%, and Hawke's Bay 91.5%.

Similar regional trends were evident for lower quartile prices. So would it be fair to say that house prices in some regions double every 10 years?

Well perhaps, but again, it depends. Because as well as big regional differences in price growth, there were also big timing differences.

If you look at what happened in the five years from June 2010 to June 2015, and then from June 2015 to June 2020, two very different trends emerge. In the first half of the decade, from 2010 to 2015, median prices rocketed up in Auckland, gaining 71.9% over the five years. But around the rest of the country median price growth was much more subdued, with just one region, Canterbury/Westland achieving price growth above 20% at 29.1%.

In four regions median price growth was either negative or negligible – Waikato +1.5%, Hawke's Bay  -1.7%, Manawatu/Whanganui +0.9% and Wellington -2.5%.

But in the second half of the decade, from June 2015 to June 2020, the price trends reversed. Auckland’s median price growth slowed to 20.5% and growth rates in other regions rocketed up, with the biggest increases occurring in Manawatu/Whanganui at +97.1%, Hawke's Bay +94.8%, and Waikato +82.0%.

What the figures do suggest is that residential property prices rise over the long term, but the rate of growth can vary widely and there may even be times when property prices go down.

So are property prices likely to double again over the next 10 years? Unfortunately the answer is the same as it was before: That depends.

The likelihood is that there will be some properties that double in value over the next 10 years. But there could be just as many that don’t.

With so many economic uncertainties swirling over the market, the real estate crystal ball has probably never been as cloudy as it is at the moment.

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Cue Yvil crowing
So I get in first
Auckland median fell 2016-19 but not much
However March-July this year median for 4 bed 200m square floor area rose 10% in 4 months.

It was really a backlash in that with lockdown pent up energies as well a lot of hype so deduct a few percent

House prices double every ten years has as much credibility as seven is a lucky number.
No serious property investors works on that just as no serious punter simply bets on number seven.

8 is a lucky number, not 7.

7 is lucky in the west.

No numbers are lucky, it's all meaningless superstition.

Only the ones on Saturday lotto

The headline is a linear comment.

Says it all.

Note that housing has done better than Bonus Bonds......

While Bonus Bonds are now being abolished, I understand that government has no plans to do the same with our housing stock - although if the lunatic Greens win the forthcoming General Election all bets are off.



Even more nonsensical than usual.

Hi Mrs The Point,

You may well be a Greens supporter - but do so at your peril......

They're a lost cause - well known for shonky decisions.

Greens will Shawly be voted out in the forthcoming election.



Wow. Puns. You were trying to find a way to be even more annoying?

Oh dear, another Greens supporter......


No. I wouldn't be upset to see them out. Their modicum of success as a social justice party has prevented them being the environmental issues party that I want them to be. But I guess if ad hom is the only thing in your toolbox, you've got to use it.


Don't worry, TPP.
After you pay your fine, your net worth will come under the $2mil asset cap - You won't have to worry about their new taxes!

Nah, it will be a claim on Liability insurance no doubt

I was going to say his credibility has now been destroyed...however he didn't have any in the first place

The Boomer binary: Residential Real Estate vs Bonus Bonds.

Afterpay shares jumped 8 folds in 18 months, Apple x 4 in same period, Facebook x 2, Atlassian x 3 in just over 2 years.
May be housing market is a bit slow.

Not sure if this is real or nominal growth. For those that are heavily leveraged, even house price growth due solely to inflation is good because inflation reduces the size of the mortgage for all intents and purposes. And a 1% increase in property value today gets you almost twice as much increase in equity as it did 10 years ago.

I’m sure there are people out there that didn’t buy their first home 10 years ago due to the moronic DGM advice that infested this site back then, and still does.

I’m sure there are people out there that didn’t buy their first home 10 years ago due to the moronic DGM advice that infested this site back then, and still does.

Silly, trollish comment. No different than suggesting that there are people who forgo the opportunity to buy Bitcoin 10 years ago (easily the most impressive investment over the past 10 years) because said it was a scam and the negative sentiment was supported by its readers.

I still remembered holding a copy Fortescue Metals Group Prospectus in 2003, it was around 27c, now $18.40. Wish I had grown a pair then!

Owned FMG for 10+ years from GFC. Mostly disappointing and got out last year after a 'flash cras.'

Also demonstrates a complete lack of regard for young generations exiting high school or university now. They don't deserve to have to fund the pensions of the net-negative people in NZ society.

Leave it to government and reserve bank to use coronavirus as an opportunity to ensure that house price double not in 10 years but much faster than 10 years - being only feel good economy in NZ and the same can be confirmed with both major political party in NZ.


Over the very long term median house prices cannot increase at a rate different to median incomes. Otherwise the exponential curves diverge and the median house cannot be afforded by the median household. And even if one goes to <50% home ownership that doesn't solve the divergence because the rent that the median household can afford does not support any sort of decent rate of return on that median house so investors won't buy it either. However, the long term is probably 50-100 years. Also, government interventions like rent subsidies can make the game play out longer. For example, suppose house prices did indeed double every 10 years, that's an approximate yearly increase of 8%. Now suppose that median incomes go up by 4% a year. If the median house is $800k and the median income is 80k (say), then in 10 years they are $1.6mil and $113k. But in 50 years we have the median house at $34.7mil and the median income at $547k. Even if rent on the house is only 2% of its value (a pitiful rate of return), that's more than our poor median earner's entire salary. Different numbers will produce different time horizons but exponential growth will always mean that median house prices cannot increase at a rate different to median incomes on average and over the very long term.

Spot on. What it adds up to is, things can't continue as they have in the past.


This. So this. Housing costs cannot continue to rise faster than incomes indefinitely.

Sure they can, if we indefinitely create fewer new houses than new incomes (jobs?). Now that my income is more than twice the median, I'm thinking I should get 2 houses.

< /s>?

Well not sarcasm as such in this case. Just a perspective of mine - if we cannot supply a house into the market for every person who has a dream of owning one, then we will effectively have to select the top of the home buyer market. As long as the incomes of the 'top' keep rising, the median incomes can stagnate without slowing house prices. For a long time this could continue.

It's a valid theory isn't it? If we imagine that we have enough (net) homes appearing on the market for 10,000 new buyers every year, then it is the incomes of the top 10,000 that matter. And that means incomes of household groups not just individuals. Perhaps mates who buy together, or families who share a home.

OK, it is not clear because home buyers that miss out could be thought of as renters, who need to pay towards a landlord's property cost, but that landlord might be government, or maybe those renters gets squeezed even tighter for make ever-increasing property values realistic.

It could work for a while. But eventually the median has to live somewhere. But yes "when" is the big question.

So if we stop building regular houses and just build backpacker dorms so we can rack'em and stack'em densely enough to get 6 incomes into one 'house'?

As long as we don't admit to what we are doing, it seems possible. It's an excellent way to increase land value for everyone else.
The obvious counter point to this idea is that we could keep house prices in line with incomes if we just stack houses densely enough while still selling them as separate entities.

Do note that I think this housing future we are working towards is horrific and will turn NZ into a very unpleasant place. I just think that Mr Robertson and Mr Orr are in complete denial and pushing us into this absurd reality where multiple median incomes are required to own a house, if you aren't already at the top of the food chain.

Or we take existing 1200m^2 sections and fill them with 8 townhouses? Just hypothetically of course.

There are many, many words I could use to describe that situation.

"Excellent" is not one of them.

Who knows, maybe our successive Governments and Central Bank wants NZ to be the new Hong Kong, where people's kitchens, bedrooms, toilets and living space all become one.

5 doublings of $800k is $25m isn't it?

Which would be comparable to $25K 50 years ago.
$25M obviously isn't possible based on 2020 dollars. But if our currency is debased then who knows?

In 2001 1USD was equal to 1 Argentinian peso. Now 1USD equals 75 Argentinian pesos.
A 2001 luxury ARS 800K apartment would now cost at least ARS 60M just 19 years later. Actually more like 100M as the underlying USD price has also increased.
Who's to say that couldn't happen here?

We should very much be questioning the RBNZ's performance and mandate.

Not sure you can really criticize their performance given the current mandate. But certainly time we had a look at the mandate, and the measuring stick we use (CPI) to see if they are really fit for purpose. (my vote is no, they are not)

Sorry - million not billion! (Now edited.) The rest of the maths is fine. 8% gets to $34.7 million, doubling would be 25% as you say. Either way, not affordable by someone on a $500k salary.

Here's a dystopian alternative. Say interest rates exponentially decay such that they halve every 10 years. That would allow for exponential growth of house prices, or at least growth far exceeding income growth. As the process continues the housing stock becomes concentrated in fewer hands. Inherited housing portfolios would tend to grow as the new owners could use the existing equity to leverage at low interest rates, and use their own income plus the rental income buy more housing stock. This creates dynasties. As interest rates decline further people would simply stop transacting houses. This is the case in Germany now. It's not uncommon to get 0.39% fixed for 10 years but you cant buy a house for love nor money. Buyers in Germany actually pay the agent a percentage of the house price to find them a house, and the vendor pays a fee too! Beyond this point I imagine civil unrest, wealth taxes, inheritance taxes. All unpleasant stuff. Thanks central banks.

10 years ago I read a comment here by someone called Zane or Zack. It pointed out something quite obvious I wasn't thinking of. I was wondering about the risks of buying a house ( post GFC concern I suppose ). He said something like

" there is risk in every choice you make. Have you considered the risk of not buying a house as well? "

For many who don't own a house and plan to live in NZ, I would say it's a bigger risk to not own one.......providing you can service the mortgage of course.

How is not owning a house a risk ? Assuming you are just looking for a roof over your head, I have owned and rented, neither were overly exciting in my recollection. Both kept me dry on rainy days though. A decent raincoat could mitigate that risk.

The risk that you either have to pay rent your whole life, or that you will want a to buy a house later on and have to do so at a higher price or a less ideal location ( of course the risk to buying could be that house prices fall ). There is certainly risks to buying a house, but also risks to not buying. All I'm saying is that usually only one gets talked about, but we should recognize both.

Failing to service debt is a universal risk for everyone and anyone

This is the Great New Zealand Dream.

This 2018 article on Auckland market is v informative re cycle.
Looks like he was right about 3-6 year plateaus, something indicated also in Greg's article.

an update on this data and graphs would certainly be interesting

Where do you measure the 10 years from?
If you measured from 3 years ago Auckland prices have only gone up 5% so there's huge growth required to have doubled by 2027. Unlikely to happen.

I have looked at multiple 10 year periods from 1992 on and the average growth in Auckland is 75-82% roughly.
Does not matter where you start.
But prior to 1992 the stats are just not adequate to research it.
Cannot see Auckland prices increasing more than 10% in the period November 2019 (which was bottom of current flop from late 2016) to October 2020.
Then I expect them to flatten and start dropping, as I have said before, in late February 2021.
By end of 2021, I expect them to be down 10%
My reason for saying this is that stock continues to flow on to a market in which buyers are in decline.
This is a secular decline and started in 2013 in this phase (sales down 26% since 2013)
Peak sales was 2004-05. There was another mania in mid 2014-15, driven by Chinese middle class exported money.
Consents are running at record highs but demand is falling.
Returning Kiwis cannot be assumed to drive price rises and sales demand. There are not enough and also you do not know if they are coming back and turfing out a tenant to get their house back.
Build cycle gets out fo synch with demographic cycle, and you get over-supply.
Also developers will start to have to offload stock at lower prices as recession impacts revenue from sales. that feeds down cycle.
QE and interest rate cuts have simply interrupted the secular decline. Housing market was v flat and declining from early 2017 to October 2019
This will resume once the current blow off top dissipates

Appallingly misleading clickbait article. To extrapolate anything from 10 years of house price data is so misleading as to be laughable.

If, as the article just posted suggests, we have a 30 year cycle of real estate prices, it is closely in step with economic recessions.
Note: 1993-96 he showed 68% rise in Auckland HPI: following 1987-92 economic inversion
1996-02 flat to 10% rise. Followed by the 2003-07 boom (China entered WTO in 2001)
2008-10 GFC
2013-16: stellar price rise again
2016-19 flat to 5% down.
Now QE and flat dead interest rate starting mini boom but CV19 recession will kill it off?

Suggestion is that next phase is not due til 2022, which is one year before the demographic of ageing Chinese will support prime buyer and spend bracket, which is age 47-55.
That bracket was at its largest in Auckland 2013-18

I think phases and cycles will be much shorter and choppier moving forward. The world is getting more volatile. To the point where I think predictions/ forecasts are a folly.
A better way to do it would be to present at least 2-3 scenarios.

Fritz.. I'd add that the RBNZ and Govts responses to unfolding events are not volatile , and in fact are largely foreseeable. Because they are the 2 biggest economic agents in an economy, if one can anticipate their likely responses then one can kinda navigate the volatility and danger u are alluding to.
Big question is..... When will their actions no longer give the desired outcomes..?? ( When will the unintended consequences manifest ? )

Yes, big question. I think once they do negative ocr there will be diminishing returns...

I don't know the statistics for New Zealand but in the US real estate bubbles became more frequent as interest rates declined through the 19th and early 20th century. Of course that socioeconomic situation that created was a major contributing factor to the second world war. A warning from history about the path we are on perhaps?

To double in the next 10 yrs requires a compound growth rate of around 7%.

SO....if monetary inflation continues to run around 7% ..... and...
Govt continues to embrace high levels of immigration of people/wealth... and
Interest rates continue to fall ( from 3% to 2 is a 30% fall. ) ..... and..
The whole building consent process stays as is...or gets worse. ( regulations and costs ) ....and
Houses continue to be NZers preferred form of savings/investment.

THEN... I can see that it is possible for house prices to double in the next 10 yrs.

I can see the above happening for one more cycle, which we are in now. ( into around 2026ish )... and then I see NZ running into the problems of what Ray Dalio calls a "long term debt cycle", and also wealth inequality and affordability issues , which we already have.

I can also see Govt. using Tax to try and control house prices...( rather than addressing the more fundamental first principle causes of NZ house price inflation ).
The social cost of wealth inequality and unaffordable housing will compel Govt. to wealth tax housing.

I think we are exposed to external shocks. I don't think our incomes any longer equate to the high cost of living in NZ.
If we get a shock there will be nothing in the freezer to see us through.

There is obviously some sort of mathematical progression in house prices that will vary across location and property type. It most certainly is not linear though. Take gold for example, it was higher in 1980 than it was in 2006, but now in 2020 it is 4x 2006. The last 15y has seen a debasing of fiat money, no better reflected than commodity prices, houses and stocks. The one factor that houses have in their favour is that you can readily leverage them, so your ROE is multiplied.

Your house won't be doubling in gold every 10 years, but in fiat money it's entirely possible over a long enough period.

Fiat money for the banks issuing the loans which needs to be paid back in real money by renting migrants and mediocre wage Kiwis whose parents weren't unable to uplift them into home ownership OR over-leveraged owner occupiers living on a financial knife edge.

Isn't this the cause of crashes, especially when the migration tap is turned off or when folks loose their jobs ?

How many family incomes increased at similar rates of increase to those quoted?
The amount of debt carried to buy a house just keeps getting bigger.
So how many people carrying such huge amounts of debt to income can sleep well in their over-leveraged "home"?
If they believed house prices would not increase, would they still take on that risk?

This is not house price inflation. This is deflation of your wages, savings and so on.
Inflation is a tax on us all...a means of wresting our wealth from us.
Time to re think how we look at things - though the banksters and pollies don't want us to.

“the arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her saving in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation. Either way, she is 'taxed' in a manner that leave her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120 percent income tax, but doesn't seem to notice that 5 percent inflation is the economic equivalent.”

― Warren Buffett

Bit of extensive research on HPI and districts of Auckland, along with segmentalising for 4 bed and 200-275 m square floor area. Shows that Auckland price (HPI) for that seam of sales rose 20% in July, compared to 2019. In Auckland City it was 40%. Waitakere City it was - 5%. In NSC it was 12%

For July 16 to July 20 the figures for Auckland, for same seam of sales, price was up 9.3%
For Auckland City is was up 45%
Manukau City it was - 4%
For NSC it was + 12%
Rodney District it was NIL
Waitakere City was - 6%

For ALL Auckland sales HPI rose from 2865 in 2016 to 3050 in July 2020, or 6.4%
Given inflation is about 2% pa, unless HPI takes off inflation (does it?) then prices fell in real terms.
NSC HPI for all sales 2016-20 rose 2%. If deduct inflation then again, real prices fell.

Prior to CV19, worst sales period for Auckland in last 7 years was first half of 2017.
Looking at May-July 17, sales were 5710
In May-July 20, sales were 5898.

As always, do have to bear in mind what additional stock has come on market since 2013 and sine 2016, when making comparisons. Since 2013, stock has gone up about 13% and a lot of that rise has been since 2016. So, sales (or turnover) is less impressive when taking that into account.

A big problem with crunching the numbers like you are, is that most of the impact of monetary inflation and economic growth ( infrastructure gains ) is appropriated in the utility value of Land .
I think u might be amazed in the rate of growth of Land values, in Auck.
Very hard to get statistics on the per sq mtr value of Auckland sections. And the Unitary plan lead to an instant revaluation of land according to its utility, .... so its harder to compare past , present, future...etc

Can we compare , pricewise, the new townhouse ,that shares with 3 other townhouses, the same bit of land that 10 yrs ago was only 1 house.?

Rodney dickens alludes to it in this article.

Utility Value was great when we had immigrants, temp workers and students coming in droves especially when we could huddle in at least 3 students and temp workers alike in the un-insulated garage for $400 a week.

Boo Hoo not many takers now, PLEASE RE-OPEN THE BORDERS before house prices become AFFORDABLE.

Thanks for input.
I am not amazed however by land inflation in Auckland.
Bit like a can of beans where they put 20% less in and charge same over time.
For example, in Hibiscus Coast they built all that at Silverdale and Millwater, then at Red Beach.
Then started at hill in Orewa
The Orewa sections are about 20% less than were at Red Beach and the RB ones were themselves smaller than Millwater. But price did not alter.
Land price Ponzi has been a feature of Auckland sales since 2005,in phases, esp 2014-16.
Create money into economy by selling land owned by large holders, then sub-dividing it increasingly, whilst price rises.
To buy the land the banks create money to lend people who then give it to those landowners releasing the land.
As interest rates fall, more can be borrowed to keep the conveyor rolling
Utterly unproductive

Look at the figures prior to 2000 and the prices increase is certainly not close to double.

Why are we comparing 10 years housing prices without comparing 10 years interest rates changes? It’s just pintless to try to come up a conclusion and predict how it’s gonna be in next 10 years without mentioning about how interest rate goes. If we still have the same interest rate like 10 years ago, would housing price still be able to be doubled?

I calculated that the house prices double every 12 years in Hamilton anyway

Easy, since the tenth root of two is 1.072. This means that for prices to double every ten years you must get a sustained growth averaging 7.2% p.a. for this to be true, now make your own conclusions. This may happen during a bubble yes, but doubling every 10 years would mean the growth would be exponential, ending up with values 32x higher after 50 years. For this to be true, a house now worth a million dollars must have been worth 33K in 1970. In conclusion all can be true depending how you sample the data.