Property values down 0.9% in December from year ago, 5.8% below 2007 peak, QV says

Property values down 0.9% in December from year ago, 5.8% below 2007 peak, QV says

New Zealand's residential property market is unlikely to be much different in 2011 than 2010 unless there are significant changes in the wider economy, with consumer confidence needing to improve before the property market returns to some form of normality, valuer QV said today.

Nationwide residential property values were down 0.9% in December from the same time a year ago and 5.8% below their late-2007 market peak, QV said. Values had been up 0.3% in November from the year before.

Values had increased over the first few months of 2010, but generally began to decline from April onwards, QV said in its overview of the year in which in said the most notable feature was low house sale volumes. There were a number of factors that contributed to low sales volumes in 2010, QV said. 

"There was a general lack of consumer confidence, and many would-be buyers and sellers were under financial pressure and were choosing to reduce debt rather than buy or sell property," Research Director Jonno Ingerson said.

"Many sellers were unwilling to realise potential losses while values were falling so were content to stay put for the time being, with some improving their existing property rather than moving. They were also recognising the real costs involved in buying and selling. Sellers were often only prepared to buy after they had sold, so this also contributed to a slowdown in turnover," Ingerson said.

“Securing finance was also an issue for many as the banks tightened their lending criteria. These criteria relaxed a little late in the year which probably contributed to the increase of sales in November” he said.

“Many property buying and selling decisions were deferred early in 2010, when the Government indicated that it was likely to introduce a range of tax changes, including a decrease in income tax and change to the treatment of tax for investment properties. While the changes to tax on investment properties announced in the May budget were not as drastic as some expected, the investment sector of the market in particular remained very quiet.”

'2011 could be the same'

Without significant changes in the wider economy, indications at this stage were that there were unlikely to be any dramatic changes in the property market during 2011, Ingerson said.

"Consumer confidence is a key driver of the property market, and that will need to improve before the market returns to some form of normality” Ingerson said.

“The latest survey carried out by suggests that some of this consumer confidence may be returning. There are now more people who think that house prices will rise in 2011 than those who believe they will fall,” he said.

“Despite the majority of people believing that now is a good time to buy but a bad time to sell, there are now more people intending to buy and more intending to sell in the next twelve months than was the case in June 2010. There are signs that the oversupply of property for sale may continue for the first half of this year as there are more people intending to sell in the next six months than there are intending to buy.” Full results of the survey are available on the QV website

“At some stage in the next year or two, the lack of building activity over the last couple of years, combined with a steadily increasing population is likely to lead to increased demand for housing and therefore a stabilisation and subsequent increase in values. This will mostly be seen first in the main centres, while some of the provincial and rural areas will continue to struggle as economic conditions remain difficult for both businesses and consumers," Ingerson said.

Here is the release from QV:

The QV price indices for December show that New Zealand residential property values have continued to gradually decline. Values are now 0.9 percent below the same time last year, and 5.8 percent below the market peak of late 2007.

Looking back over 2010, values across New Zealand increased in the first few months of the year continuing the trend from mid 2009. From April 2010 onwards, values in most cities and regions began to gradually decrease again and by the end of December had dropped 1.9 percent compared to March. The rate of decline slowed towards the end of the year, suggesting that values may be beginning to stabilise in some areas.

Significant differences were evident between the main urban, provincial and rural areas throughout 2010.

Values of residential properties across all rural areas stayed relatively flat through until May before steadily dropping for the rest of the year. By the end the year values were 2.5 percent below the same time last year.

Across all provincial areas values rose through until March before falling until June, stabilising for a few months, then dropping steadily in the last three months of the year. Values ended the year 2.3 percent below the same time last year.

Across all the main urban areas values rose through until April before starting to decline. This rate of decline slowed towards the end of the year, and values ended the year 1.1 percent below the same time last year.

There were also differences between the Auckland and Wellington areas throughout the year.

In the Auckland region values increased by over 1.5 percent between January and March then slid back until July. The decline slowed through the second half of the year with the last few months being relatively stable.  Values in the Auckland area ended the year 0.6 percent above the same time last year.

Within the Wellington region values increased by just over 1.0 percent through until April before rapidly dropping away until October when they flattened, then rose slightly from November to December. Values ended the year 2.2 percent below the same time last year.

Jonno Ingerson, Research Director for said “low sales volumes were the most notable feature of the residential property market throughout 2010”.

“The year started with sales numbers similar to 2009, but from March 2010 onwards they began to drop. Between June and September volumes were at the same level as 2008 during the recession, 28 percent below 2009, 27 percent below the long term average, and 57 percent below the peak of 2003” said Mr Ingerson.

“The number of sales in October 2010 dropped to the lowest level for that month since 1985, and while there was a very mild recovery in November, it was still well below average. Early indications are that the number of sales will also be low in December. If that is the case then the total number of sales for the year will be about the same as 2008 and the lowest since 1991” said Mr Ingerson.

Mr Ingerson said “there were a number of factors that contributed to low sales volumes in 2010. There was a general lack of consumer confidence, and many would-be buyers and sellers were under financial pressure and were choosing to reduce debt rather than buy or sell property. Many sellers were unwilling to realise potential losses while values were falling so were content to stay put for the time being, with some improving their existing property rather than moving. They were also recognising the real costs involved in buying and selling. Sellers were often only prepared to buy after they had sold, so this also contributed to a slowdown in turnover”.

“Securing finance was also an issue for many as the banks tightened their lending criteria. These criteria relaxed a little late in the year which probably contributed to the increase of sales in November” said Mr Ingerson.

“Many property buying and selling decisions were deferred early in 2010, when the Government indicated that it was likely to introduce a range of tax changes, including a decrease in income tax and change to the treatment of tax for investment properties. While the changes to tax on investment properties announced in the May budget were not as drastic as some expected, the investment sector of the market in particular remained very quiet” said Mr Ingerson.

Mr Ingerson said “As is always the case, general statements don’t apply to all parts of the market. Throughout the year, the market for high quality, well presented, mid-range properties in good areas remained strong with plenty of demand and good prices being achieved. At the other end of the scale, poorly presented properties, or those with undesirable features in the eyes of buyers were either not selling, or were selling for lower prices.  Mortgagee sales continued to impact values in some pockets of the market”.

“Without significant changes in the wider economy, indications at this stage are that there are unlikely to be any dramatic changes in the property market during 2011. Consumer confidence is a key driver of the property market, and that will need to improve before the market returns to some form of normality” said Mr Ingerson.

Mr Ingerson said “the latest survey carried out by suggests that some of this consumer confidence may be returning. There are now more people who think that house prices will rise in 2011 than those who believe they will fall”.

“Despite the majority of people believing that now is a good time to buy but a bad time to sell, there are now more people intending to buy and more intending to sell in the next twelve months than was the case in June 2010” said Mr Ingerson.

“There are signs that the oversupply of property for sale may continue for the first half of this year as there are more people intending to sell in the next six months than there are intending to buy” said Mr Ingerson. Full results of the survey are available on the QV website

Mr Ingerson said “At some stage in the next year or two, the lack of building activity over the last couple of years, combined with a steadily increasing population is likely to lead to increased demand for housing and therefore a stabilisation and subsequent increase in values. This will mostly be seen first in the main centres, while some of the provincial and rural areas will continue to struggle as economic conditions remain difficult for both businesses and consumers”.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Say something positive Jonno...positive mind...none of that 'tell it like it is crap'...

Down 0.9% from up 0.3% in Nov. Gross change 1.2%, for a running loss rate of....14.4% per annum...NZ median would drop from $439k to $375k by New Years Day 2012 at that rate...That'd be the first 20% of drops from '07 out of the way.

Lol - I'm sure BH bet his livelyhood on a 30% drop by early 2010.

NA, I am embarrassed for you (and for the butchered mathematics).

An average 12 year old could pick up three critical errors in your projection.  Surely other readers are perplexed by the irrational logic?

Yes I am perplexed by the irrational logic of  NA, Wolly etc

That would be a median 12 y.o., Chris_J!  You missed my can try and make any set of figures or figure appear to be whatever one wants.....

 Taking into account inflation that is a 12% drop for the last 3 years. I guess housing isn't always a good hedge against inflation :)

What....don't you believe OllyN is the time to buy...pile away the property and when you turn 98 it will be worth heaps'll be rich mate...even better if you borrow to buy...the bank will invite you to all those wine and cheese events...pat you on the back and tell you what a great financial thinker you are...a model that others should copy........

Aye?  How do you get to 12%?

It's easy shorts..first you press down the one key...then the two key...............

Nor is money in the bank, or most investments, and if getting a reasonable rent return in meanwhile that is at least something.  The ones who are losing most are those who have most their capital tied up in owner ocupied property, or in holiday homes

Good point in an old Bedford with tent attached on the back lawn are best and you can collect rent from filling the house up with rellies. If you don't have a house of your own, park it up at a mates place. Make sure the rellies are into the rent subsidy rort and grab it with the rent. Then when you're rolling in it, it'll be their turn. 

No Wolly, Bill English tried that and he was rightly told to pull his head in.

It's the game gotta grab your rent subsidies using the rellies whether Bill English pulled it in or not...easy money muzza....piece of cake....heaps doing it.

You are  weird

In this economy muzza, that's got to be a positive.

or yachts:(

Not so bad for bludging government guarantee welfare beneficiaries though, eh?

Makes no sense to pick this particular asset class performance as bad - in fact property has been in general flat over a very rough recession. How about all the rest?

(Anyway Central Auckland has powered ahead regardless of the recession - this report is too general to show that)


It still down slightly after inflation. Would have been better to just have your money in a term deposit.

Yes SK, in terms of investment, definetely a sideways shift. LOL

Shorts, house values 101:

Real price declines are the combination of nominal price falls (in this case 6%) plus inflation (in this case circa 6%)

Therefore real house price fall equals 12%


Good assumption - please remind me not to buy a second hand car from you!

I think those figures are incorrect.

Let's try it a different way. New Zealand M3 Money Supply has been growing by about 8.76%/year for the past decade.

So over the past 3 years, that's an increase in the M3 money supply of about 28.6%. Add on the claimed fall in house prices of 6% over that same period, and you get something more like a 34% fall.

Now if the economy has been growing, then you have to subtract that growth from the 28.6%.

As I've said until I'm blue in the face, the error Bernard made was not to say "real terms house prices" in his prediction.

The US CPI is Fiddled. Is the NZ CPI?

"IMO if it looks like a fish, and smells like a fish, it probably is a fish"



Not sure what you are getting at by talking about the money supply. Not really that relevant to house prices when you consider that housing stock is constantly increasing and the economy as a whole is far larger than just our housing stock.

He has a very valid point in relation to the M3  money supply . Broad credit growth is reflected in M3 growth , and lets face it New Zealanders were fixated with borrowing to invest buy or trade in property during this time , or simply borrowing against their homes to use them as a private ATM machine . 


Hello Taxman,
The money supply is VERY relevant for all prices. Prices are determined by supply and demand, for both the things being bought and sold, and of the "money" needed in the transactions. When someone takes out a loan, that increases the money supply, and alters the supply of "money", increasing it. That extra "money" can then compete for what supply is available. An increasing money supply tends to lead to an increase in prices.
If the economy grows at the same rate as the money supply, prices will tend to remain the same, only being affected by flows between sectors.
So a money supply that is growing faster than the economy will inevitably lead to rising prices, which really means an erosion of purchasing power.
This raises the issue of what the NZ$ currency really is. It is used both as a medium of exchange, for buying stuff in shops, and as a means of saving. Those who lend banks their "money" by putting it into savings accounts are saving.
The question is, does the NZ$ serve well as both a means of exchange and as a means for saving? If yes, then it could be called money, if no, as I think is the case, it's only a medium of exchange, and just a currency.

If you consider how a housing bubble works, you will see that each loan, each mortgage, increases the money supply, and causes house prices, and other things, to rise. That is at the expense of an increase in total debt. By measuring house prices using a flexible ruler which our NZ$ currency is, one has no real idea what real house prices are doing, unless INFLATION (the increase in the money supply) is used.

The current war is between savers and debtors. The debtors, those who have borrowed in order to spend now, hoping to repay later using future income, would like to see the currency inflated.

Savers, who hold that currency, want their savings to retain its purchasing power, and will be against such inflation.

The system, the banks, the banking system, can only succeed while the currency is inflating, so they are on the side of the debtors in that sense.

Politicians want the voters to be happy enough to vote them back in, so they play a fine game, more interested in votes than what is right, or in the end, best for everyone.

What is "Inflation", "Deflation", "Hyperinflation" and the "money premium"? by Steve Netwriter


Or it could be a polly SN....!

Brilliant and thought provoking analysis Steve Netwriter. One of the most stimulating articles I've read this year, keep up the good work.

Thank you Roger, very kind of you :)


Hmmm.  $500K house in 2007 x 2.5% compounding inflation for 3 years gets you $540K.

5.8% decrease on $500K gives you $470K giving a 13% decrease.

Shorts , your'e spot on mate , the scenario is actually potentially worse than that because when you sell in market that has dropped 5.4% in real terms and 12 % in real and inflation adjusted terms , there are selling costs in the form of agents commission shaving up to another 4% off the gross selling price.

Suddenly a loss of close 20% on a residential property over the past 24 months does not look unreasonable at all.  

Bernard H may have the last laugh yet 

Now we are getting close...just need to substitute the headline inflation rate for an effective inflation apply holding cost if applicable.

"QV did not publish updates for Christchurch City, Selwyn or Waimakariri, citing low volumes and a delay in sales activity after the Canterbury earthquake"

I wonder if they'd have published them ,if the were goodies?

Hi NA, well living in the CHC area sales are all over the place, the areas that are hardest hit you just about forget about selling there as no one is looking, then all those house owners that have now got registered damage over $10k-$100k are having trouble selling if damage is not fixed (and word is that will  be at least two - three-four year process) , and those with damage over $100K, they speak for themsleves, those with land damage as well wont bear well when comes to sale time. It will be a longtime before any accurate data can be taken out of Canterbury area given the extend of damage and that it covers most areas, but some people have lost a signifcant amount of value, some only a small amount depending on which of above catergory you fit into.Hence why I suspect they left the region out fo there fiqures.

Thx for that FCM. I understand the logic ( althought I'm sure Chris_J will question my capacity!) but disagree with it. At some stage QV will have to start including Christchurch again. Why stop, then? And when do they re-start? Any sale is just a function of whatever is happening in the market, and will normalise at whatever it does in due course. Leaving out 'non market' sales, which I guess is their reasoning here, makes as much sense to me as them leaving out mortgagee sales, if they don't appear to be 'at market'.  If there are, as you say, few sales, then they must have a lesser effect on the larger pool of statistics. The market is the market, surely?

True,  but after such an event, the market here is not the norm with the rest of NZ, and would not be for a while as the rebuilding process is going to be long. If they had included the fiqures it would probably distort the median they are looking for.

asymmetric information is advantageous for some...

Avoid the cliff diving headlines....

You may be right AL...but what are the unintended consequences?....and what would happen if it were removed?...

I knew all you guys would start to factor inflation into your calculations once your predictions for a housing price crash didn't occur. The fact is the majority of property owners have a mortgage, and the value of the debt decreases with inflation. Yes the house might not be worth as much in real terms, but you don't owe as much in real terms so inflation is not a bad thing.

Not me, Jimbo. I'm an ex inflation person. But I'm intrigued! How does inflation help pay off your mortgage if you don't get a pay rise and the cost of everyday goods goes up about you, taking away more disposable income? Capital gains, might once have been your answer, but no longer.

Put it this way - if a cucumber is worth $1 and my loan is $100, then my loan is worth 100 cucumbers. If a cucumber goes up to $1.10 and my loan is stilll $100, then my loan is now worth 91 cucumbers. So the real value of my loan has dropped.

Not at all! You have to pay the same nominal amount of the loan, and it costs you more to buy your cucumbers! In fact, you have less left over after buying your cucumbers to pay the loan off with...Inflation is not 'good' ; it destroys past and present work effort, and benefits gambling; potential ( limited ) reward without effort..

...... what if Granny spots the cucumbers , and not realising that they are your mortgage payment , ........ she chops a few up and makes a salad ?

Are the remaining cucumbers worth more , or does the salad count as a value added product , and increase your over-all wealth . .......... Either / or , you're in a win/win situation .

........ if the bank manager boots you into the street ...... you're not gonna starve !

Except the banks compunding 7% on your $100 loan (or if you pay principle as well as interest, the lose of 5% interest earning on that money) so for the cucumber to go up 10% in value, say 4 years at 2.5% inflation PA, then your $100 loan is now worth $131, or 119 cucumbers at 1.10 valuation.

Banks will never let inflation reduce the amount of money you owe them, show me a period in time where bank interest rates have ever been below inflation (or even close to inflation). In accrued accounting sense, you will never see banks allow inflation to reduce the amount you pay owe them.

Borrowing money at 6% plus rates to buy an asset that is going down in value or even staying flat in value (in nominal and real terms) is never a sensible thing to do... thats why so few houses have been selling at current prices, only the people who have had there heads in the sand last few years are still buying, still remembering the BBQ talk from 2005 and getting conned by real estate agents and banks 

....... best to preserve  the cucumbers , then ? ........ And pray that Granny doesn't get the  midnight munchies after smoking weed , and scoff your ongoing mortgage payments .

'Struth , I never realised that negative gearing could get one in  such a  pickle .

Yeah, depends on how you do your calculations. Most people don't consider inflation when working out whether it is best to rent or buy - if you are paying 6.2% interest on your mortgage and inflation is 2%, then the real interest rate you are paying is 4.2%. If you do calculations at 4.2% you will probably find that real cost of owning is actually pretty similar to renting. Of course in the real world you have to actually pay some principle as well and you don't realise the inflation effect on your loan for a while, which may make buying out of reach.

...... nailed it Jimbo ! And if Granny grabs yer cucumber .......... Forget the bank manager , think " Catherine Zeta-Jones , Catherine Zeta-Jones " ............. ooooooooooooohhhhh ......... are those your teeth in the glass ? ..............

but he's beaten the cancer and is back with a viagra induced love for Catherine?

That calculation makes no sense. House prices are not accommodated by the CPI for one. Secondly, inflation DEVALUES everything. It weakens currency, therefore your wages and buying power and ups your living costs. Interest is paid (in theory) to counter that. You really should be adding the 2% to your bank loan interest figure. Not taking it away. Capital gain figures are again very relative and go up, down, sideways as we all know.  Simon, I think you were alot closer to the mark on this




Struth AL...I'm almost all thunk out....can't argue with you though....and I doubt any govt would take the ice cream from the baby. Just another $1.5billion in transfer payments every year.

Glad to see I've done better having my dosh in a term deposit. 

Just before my Dad bought his house for $11,000 in 1962 a guy told him not to buy, prices were falling, that house prices were going to drop.  Good thing he realised that guy had no wisdom and was in fact a fool.    W

I suppose you guys with the calculators will tell me his $11,000 would have increased to $1mil in the bank.  Anyone wanna do the sum...

My thought is that house price debt saturation point has been met and the house price to income ratio is a lot further out compared to 1962. I do hope (for my sake) that house prices do drop as I would like to buy a home in the next year, at the moment it's save save save for that deposit.

In the last 30 years bank deposits only lagged housing (which had the best return) by less than a couple of percent total return. There was an article on this site about this but I can't find it for the life of me.

A few things is to remember that during the last 50 years interest rates have had periods where the rates have been around 20-25% (money would double in every 3.5 years). The house would of had to have been re-roofed at least once and kiwis on average spend tens of thousands on rennovations. Then he must have been paying rates for 50 odd years.....quite quickly you can see that it isn't such a spectactular return. Without doing the calculations I estimate the money would be around 700-800,000 in the bank, and that the house would have incurred at least 200-300,000 of expenses over the years.

11,000 in government 10 year bonds since 1985 would have yielded 95,000. This is using the RBNZ figures. Term deposits would be even higher. Unfortunately I can't go back past 1985 since the figures are not available.



My estimates were probably out quite a bit. I calculated using the RBNZ 6 month TD figures and it came out to 320,000 dollars, though note this is after tax and also only yearly compounding so it likely the absolute minimum you would expect. The actual rate is probably quite a bit higher, i.e. longer period TD's are more likely with quarterly compounding, I would estimate it would be more like 500k.

It would be interesting to know how much was actually spent on that house as it does look like it has significantly outperformed.

Dad spent very little over the years.  If he had it would be worth more than the $1mil now though.

Dad spent very little over the years.  If he had it would be worth more than the $1mil now though.

Taxman, Taxman, thank goodness you don't do my taxes.

Is mathematics really that difficult for's readers?

Obviously so.

Using RBNZ's 6 month term deposit figures (which go back to 1965 and I've estimated for 1962-64):

$11,000 invested in 1962 would be worth (assuming marginal tax at 30% (I know it's varied but this is a very conservative assumption)) ... wait for it ... $125,000 today ... oh dear!

Okay so the $11,000 house is worth $1 million today, but wait now this is where I'll rub it in.

An $11,000 house in 1962 was a fairly expense house (almost twice the average price of $6,200).  It would have probably returned about 10%PA net of expenses (yes returns were better then), which with inflation is about $450pw today.  (I imagine that the gross rent on a house worth $11,000 in 1962 would probably be something more like $700 to 800pw today so these numbers may in fact be conservative, but anyway:

The total rent received in nominal terms based on the assumptions would be $331,000 after tax, which is good but doesn't sound that great BUT if the rent had been going into a bank account at the 6 month term deposit rate, then the after tax amount would be $819,000 (almost 7 times what the original purchase price invested alone would have been worth - plus you've still got the house!)

BUT if the money had been used to pay off a mortgage on investment property at the relevant floating rates over the period it could have repaid a $1.21m loan (calculated to include the loss of the tax deduction from having repaid the mortgage).

BUT WAIT ... what if your mortgage wasn't tax deductable and instead of receiving taxable income from rents you avoided paying a non tax deductible rent (ie you lived in your own home).

THEN you would have been able to pay off $3.9m of mortgage!  Well not really as your mortgage (or tax deductible amount) could only be $11,000 - but it does show how great it would be if we didn't have to pay tax!

BUT what could this mean? One way to look at it is: if you bought a house in 1962, and always had a small mortgage with payments equivalent to rent (ie when your mortgage was fully repaid you bought a more expensive house and continued to make the same payments equivalent to rent) then you could have upgraded to a more expensive home every few years until retirement (for about 45 years), in which case you would have moved from a house worth 1.75 times the average in 1962 to one worth 7.25 times the average today (with no mortgage).

SO assuming the $11,000 house in our example is now worth $1m (that's a lot better than the average appreciation - about 60% better) and that is because the area improved better than average (say Auckland central) then by trading up and never paying more than the home owner would've paid in rent for their standard of house (which was well above average to begin with) they could now live in a house worth $4 million mortgage free.

Even if the area didn't have the "extra" appreciation they could still be in a house worth $2.5m.


So what's this shown?

On an investment only basis:

1. If you'd taken the $11,000 in 1962 and put it in the bank  - you'd have $125,000 and be a first class mug. (average after tax 5.2%PA)

2 .If you'd bought the house in question as a rental in 1962, you'd have between $800,000  and $1.2m after tax in the bank depending how the rents were re-invested.  PLUS you'd have a mortgage free million dollar house.  Total investment return now $1.8m to $2.2m after tax.  (up to 11.6%PA total return after tax)

If you needed a house to live in too:

3. Like "1" above if you'd taken the $11,000 in 1962 and put it in the bank THEN paid someone rent for 48 years - you'd have $125,000 and have a masters in being a mug.

4. Or you could have bought the house and lived in it (with the $11,000 you had) and then saved what you would've paid in rent and you'd have between $800,000 and $1,200,000 in the bank depending on how it was invested.  PLUS you'd have a mortgage free million dollar house. ie $1.8m to $2.2m after tax in assets.

4. Or you could have upgraded over the years always making mortgage payments equivalent to the rent that the mug in option "1" paid and now be living in a mortgage free house worth $4m and not having paid any rent since retiring (alternatively you could have saved the rent since retiring: remember the poor old mug in "1" would still be paying rent - another $60k in only 3 and a bit years!)  So you would be $3.95m after tax better off than the mug - 31 times the mug's net worth - and not an extra cent earned!


Remember in this scenario we started with someone who had $11,000 cash in 1962 (equivalent to $620,000 plus today) plus could afford to pay rent on an expensive house (or alternately the diligence to save that amount) for the following 48 years.

Looking at scenario "4" it's not hard to see how people who have worked all their lives end up living in expensive properties.

Anyone suggesting never to buy and always rent is surely testing history.

Any non-believers left?




Of course! As I've said before, 'property worked'... it doesn't now and won't for some conciderable time into the future. (I'll let you do the figures on that as it appears to be your thing; Oh!  And, by the way; it was mine. That's why I don't own property now). Big call? Not really! But, just like you, I have a view...The difference between you, me and the 'rest' is that you and I can survive being wrong.....

PS: The difference between your figure work and mine is that you use absolute change ; I use rate of change. Kind of like the difference between speed and acceleration - you know the stuff Options Traders use.

NA, so in 1962 you would have chosen to put the money in the bank?

Opting to have the reward of $125,000 in 2010 for a lifetime of paying rent, rather than $4m in assets from spending not a penny more?

Let's think about it this way.

If property prices hadn't risen a bit faster than inflation and in fact were exactly where they were in 1962 relative to a single income and if you hadn't bought in an area that improved like FYI's dad, then the $4m house would be worth maybe $1.6m but that's still a hell of a lot better than $125,000 in the bank.

But the rise relative to single incomes was real because most households became dual income, and the stronger rise in some areas was also real (such as in the centre of the big cities) because some areas became more desirable.

There are very few situations where the money could possibly have been better off in the bank.  The only options causing that could be mass depopulation or long term deflation both of which are improbable unless you believe that some kind of armageddon type scenario is likely.

If you think rate of change is important, then what about general relativity (like Einstein discovered).  You have to think about the frame of reference -  prices in nominal terms are not constant so you will be wrong from the outset if you make that assumption.

Not at all. I have no problem with acknowledging that property 'made' wealth in the past. Heaven help us! Didn't we all 'get rich'? ( And we did, if we sold and put the cash in the bank) But not now, Chris. If you have 'it' and want to hold it ,and it make mathematical sense on your Xcell spreadsheet, then fine. My suggestion is that to enter the market now, is wrong; and will be for some 'X' number of years. Debt will come home to haunt all those that can't afford it; and those flow on effects  will come to effect those that don't realise that it will.

 Chris, could you please post your calculations? I had a look through mine at it still comes to well over 300k even taking a very conservative calculation i.e. non-compounding.This is taking the figures from march of every year (since 1965) and running it through a simple excel spreadsheet and also subtracting the historical witholding rate.

The other problem I have with this is that how many suburbs in New Zealand have an average price of over a million dollars? There is probably less than 10 in the entire country, and you are suggesting an average house figure in the millions. Something doesn't add up here. The average house price in NZ is about 350k.

If there really is that much of a difference then it really seems to contradict the article on this site (i think it was about 1-2years ago) that showed housing as offering the best historical return with term deposits only slighly behind it, followed by bonds and then shares. I would love for someone to track this article down, i can't and i've spent ages trying to. Does anyone else remember it?

It's a bit difficult to post the calculations on here as I did them on excel, but I can talk you through the calculation now if you want.  (I could email the calculation to if they're interested??)

For the term deposit calculation I used data from the "hb3" table available from this link:

under "Interest rate – Six month deposit rate historical"

That has data from Mar 1965 to Dec 2010.  I assumed the same rate from 62 to 65 as it was in 65 as mortgage rates were essentially flat over that time.

Okay so you've got the data, now you (Taxman) seem to be wound up over compounding interest but this won't make a huge difference to the outcome because the interest rates are fairly small.

As an aside, banks of course sell a mortgage as 6%PA and then charge 0.5% at the end of each month, which effectively equates to you having paid 6.16% for the year.  Which of course leads to the question of why can't one pay interest in a lump sum at the end of the year and save themselves the 16bps.  Of course this is what the banks do with their wholesale borrowing, and when it comes to making payments on term deposits.

So now I think where you (Taxman) have gone wrong is that you have assumed the 6 month TD rate is paid at the given rate for the 6 month period, when of course you need to halve the interest payment for the 6 month period (ie the you wouldn't have earned 9% over the past year by investing in two 6 month TDs!).  So if you redo the calculation you will probably concur with my result.

In regards compounding, 6 month TDs are paid on maturity at the nominal interest rate.  On my intial calculation I assumed they were at an effective interest rate I=(1+i)^((1/2) but banks in NZ actually pay I=i/2 on 6 month TDs so the result is marginally different to earlier at $136,000.

So on the excel spreadsheet, you have interest rates (i) in the first column, tax rates (t) in the second column and in the third column the value of the investment.  In the first row of the third column this is the initial value ($11,000 = V(0)).  In the next row you have a formula (in mathematical not excel form) V(n)=V(n-1)*(i/2)*(1-t)+V(n-1).

Now my calculations so far assumes that tax was paid at 30% each year which is not likely for an $11,000 investment which was a substantial sum in 1962.  So someone in my scenario above was probably paying tax at the top marginal rates (due to their other income - not just income from these TDs).  Remember the top marginal rate was at one stage 66% in the 80s.

Using data from Treasury which goes back to 1972 (and assuming a 45% marginal rate prior to then which I think is correct but not 100%) then the after tax value of the $11,000 today would be just $72,000 which is absolutely appalling.  Remember in 1962 $11,000 would buy a large villa on a quarter acre in Remuera (almost double the average house price). 

What would $72,000 buy today???

Now assuming the higher marginal rates someone who bought the house and saved (in the bank) what they would have had to pay in rent would also have paid more tax and obviously have less savings now but would still be substantially better off.

BUT the person who kept on upgrading, always having a mortgage would be no worse off because they never paid tax on that money anyway.  So that person could still have the $4m house I mentioned before.  Which is staggering when comparing it to $72,000.

Now your concerned with how I'm talking about someone living in such an expensive house.

Remeber we started out discussing someone who had a house that today is currently worth one million dollars.

So lets assume that the original house was a $5,000 house and it wasn't in an area that had seen such spectacular growth (remember according to what FYI told us the house had increased in value by about 60% more than average which is consistent with someone buying a pre 1940s house in 1962 in a good part of Central Auckland.

So in this new scenario, the first home the person bought would be worth $277,000 today and if they had traded up as they could afford over the years only ever paying as much as someone renting the equivalent house they could be living in a mortgage free house worth $1.15m having stopped making any payments 3 years ago at retirement.  While the person who put the $5,000 in the bank would have $32,000 in the bank today and still be paying rent.  The homeowner having spent not one penny more than the renter (and now spending much less as they have no rent or mortgage to pay).

Isn't that absolutely staggering??

Timaru property values in dumps

"Real Estate Institute of New Zealand (REINZ) South Canterbury spokesman Warwick Jones said it would be crystal ball-gazing to say if the decline would continue or if prices would level off."

Funny how that never deterred the property spruikers from breathlessly predicting never-ending property price increases, back before the bubble burst.

Timaru spelt backwards is U-ram-it.  Its probably just the drain of people from that place.

Timaru population 27000

Less than Waitakere in Auckland.

Not really that important in the big picture is it?

Timaru's population is nearer 50,000 or more, but it's also one of the most important NZ ports, and a major agricultural service centre servicing much of the lucrative SI dairy industry.

Until recently it was viewed as being economically bulletproof, but now it just looks like a typical example of NZ's contracting economy.


Timaru and SCF have taken a big hit, simple as that.

So much for all that talk about the SCF people getting their money back and buying houses. I suppose they have learned their lesson and wisely just put it in the bank.

Or maybe they "invested" it with other finance companies.

How can they possibly lose?

Simpleton, your link shows Timaru's population is 27,000 and the that district (which includes several sizable towns (Temuka, Farlie, Geraldine, Pleasant Point) is about 42,000.

Simpleton, when you post some evidence shouldn't it agree with your argument?

Anyway, with the median house price of $240,000 triple the $80,000 it was in 2002 (average 14.7%PA capital gain including the slow years), Timaru hasn't done too badly (better gains than Auckland over this period).

"Anyway, with the median house price of $240,000 triple the $80,000 it was in 2002 (average 14.7%PA capital gain including the slow years), Timaru hasn't done too badly (better gains than Auckland over this period)."

Have incomes there increased as much? Not likely. The cost of living has increased a lot though.

So house asking prices have tripled, and the cost of living has greatly increased , but incomes have stagnated.

That sounds like a recipe for disaster. No wonder they can't sell their houses.

Must have been all the SCF lending, awash in the town :), and now that's been disbursed back into the wider economy via the banks.

Well, you know what they say: "Ya can't lose with property!"

Very similar story in Marlborough malarkey....a low income region that experienced insane price rises...funny thing is soooo many have now been sitting unsold for years...the flat earth folk really do believe the aliens are coming with pots of money...and every week a few more locals cark it as we all sales abound...mostly places not changed since the 70s...single glazed and poorly insulated....bugger all buyers because the grape and wine bonanza has gone pear shaped.

I suspect 011 will be the last straw for many and the averages or mediums or whatever will take a sharp drop across the region. The grape/wine industry is set to plod along trying to finance the debts. Rural land prices are down heaps. But hey at least we have a multi story car park to pay for and a forest of parking meters to look at.

Mate think of the debt the Timaruvians have had to take on to buy property that has gone from 80k to 240k in under 10 years!
Chances are their incomes before 2002 were barely adequate but they must be drowning now that everything costs so much more but incomes haven't gone up at all in reality.
This has got to be one of the best examples around of how the property bubble was doomed to failure right from the beginning!


I think few would deny that buying property in the past has beeen a great investment.

The problem is, the past is the past, and property has inflated so much relative to incomes that there is limited potential for any significant capital gains over coming years. In fact, assuming only minor wage growth, its almost a mathematical impossibility that we will see even half the growth in prices we saw from 2001 to 2007.

In relation to this point people should read  the Unconventional economist, and this statement eloquently supports what I am saying above (its simple maths really) :

"In case your algebra isn't too flash anymore, let me put all that into words, just to make this 110% clear...

If we assume that prices increase at the lower end of the spruikers' range, incomes grow faster than normal, the loan is interest-only and the interest rate is a mere 7.5%, the "prices double every 7-10 years" crowd would have you believe that, in the space of just two decades, the average income earner will be devoting 90%+ of their gross income towards paying the interest on the mortgage of their median house.

And that's before even worrying about paying taxes, buying groceries, putting fuel in the car and paying off the credit card, let alone reducing the principal of their loan... Good luck?!!

You see, that's the problem with exponential growth which outpaces the fundmentals, such as growth in wages or growth in the economy... It can't keep going up like that forever.



MIA, there have been periods in the recent past where prices have been flat yet over the long term inflation always pushes prices higher.

In the Timaru example, prices were essentially flat from 1989 to 2002 despite CPI inflation being about 41% over the period.  So the recent boom was really a bit of a price catch up. 

In fact assuming we had 2.5% inflation in Q4 2010 (due to GST adding 2.22%) then CPI inflation since 1989 is 80.8% (this is the period where inflation has been largely "under control") which is about 31% every 10 years.  But remember the CPI doesn't include existing housing but does include lots of cars and imported goods that have plunged in relative cost (consider the price of a VCR for example, in 1985 one cost about $2,000 ($5,600 in today's dollars)).

So what have wages done? After tax they're up about 142% for the period or 49.5% over 10 years.

And how about house prices? Well they're up 74.8% per 10 year period.  (That's up 241% over the 22 year period - hence you might say proof for Mr Hickey's deduction that prices will fall 30%).  However remember last time prices were that low relative to wages interest rates were 15% plus, hence the conundrum that houses prices may seem overvalued today but they aren't really when all things are considered.  And even if they were overvalued (which I'm not saying they are) it would only take about 7 or so years of flat prices for the house price to wage ratio to return to the same as it was in 1989 - therefore no significant falls are necessary (certainly no 30% drop is required) to get back to those mythical ratios (now that is on the assumption that it is rational for prices to return to those ratios which obviously I don't agree with).

So back to my point:

It is entirely reasonable for house prices to increase about 40-50% over a given 10 year period even if inflation is controlled under 3%PA.  Hence property will continue to be a good investment and a far better option (in most cases) than renting.

I'm not sure why there are such arguments property is unaffordable, as you say requiring 90% of the average wage for prices to keep going up.

Back to Timaru for an example, you can buy a starter house for $90,000.  At current interest rates and just a $10,000 deposit your mortgage interest payments will be just $100pw.  A single full time worker on the minimum wage takes home $440 after tax per week.  That single worker on the minimum wage with no benefit top-ups could get in one flatmate whereby owning the house would then cost them virtually nothing.  In fact the rates at about $22pw and insurance at $8pw make the actual cost of paying for the house look very cheap.

That's in a pleasant city of 27,000 in a good climate zone less than two hours from Christchurch.  But of course you can buy in Bluff or Gore for perhaps $30,000 for something liveable.

In Christchurch itself, you can buy a liveable stand alone house for perhaps $150,000 in a reasonable "up and coming" central location (perhaps $160pw interest payments with a small deposit). 

Houses on the outer fringes of Auckland and Wellington are available for not much more, even some for well under $200,000.

The argument that houses are overvalued because it's very expensive in Ponsonby, Mt Eden or Parnell isn't a particularly valid one, especially since those are the areas where prices seem to be moving most right now

"In the Timaru example, prices were essentially flat from 1989 to 2002 despite CPI inflation being about 41% over the period. So the recent [bubble] was really a bit of a price catch up. "


Blinkered PIs have been telling themselves that, ever since the advent of the now-dying property bubble, and they are still desperately telling themselves the same thing in an attempt to justify that bubble, but they are as wrong now as they were in 2002-2008.

NZ property was in no way undervalued before the property bubble inflated.

Spruiking PI apologists and RE shills like to believe it was - and love to say it was - but it wasn't and isn't.

It's funny to see you clowns, sporting that deer-in-the-headlights gawp always on your mugs recently, claiming that because some rural backwater's property prices were lower than those of, say, Auckland's most primo locations, it can only mean they were "undervalued".

The reason prices were low in Waikikamukau East is because essentially nobody wanted to live there, and even if they did there were no jobs above the level of part-time paper boy available to support them. And nothing has changed, except that those places are now even more economically backward.

When some latte slurping property "developer" twat in Ponsonby tries to tell you that a derelict out-building next to an abandoned sawmill in Murupara is "undervalued", simply because it's property - and as we all know, property is magic! - then you know property is destined for disaster, because people spouting such patently embicilic claptrap obviously have absolutely no idea about anything at all.

NZ property values were, in general, at about the place they should have been back before the bubble. In some places the prices were too high, but not obscenely so...not like they became once the idiotic bubble of drooling f***wits was inflated.

Now run along, clueless little spruiker, and do the only thing in this world you have left to do: cluelessly spruik.

Just be aware that everybody is laughing at you, and quite rightly so.

Just one minor thing Malarkey...." have absolutely no idea about anything at all."...err no...sprookers do have a sound grasp of just how thick two planks or lots of punters can be...and sprookers are really shearers of a sort...they plan to have the fleece off the fools back in a jiffy. Which is why they sold so many plots and boxes of shite in  Waikikamukau East to so many fools who now have them listed on Trademe thinking they too can find a sucker....fat chance.


I struggle to understand how anyone could honestly believe that house prices will over the long term fall in nominal terms.  As general prices rise, so too does the cost of producing housing and hence existing house prices rise too.  There are obvious caveats to that: if the cost of producing houses became significantly less (not likely with conventional housing), if there was a mass surplus of supply (unlikely in NZ without depopulation), if commodity prices and wages fell (which won't happen while current global policies are anti-deflationary).

I'm not a spruiker, suggesting 40-50% nominal gains over 10 year periods is fairly conservative.  To be honest if the median house price in 2020 isn't over $500,000 I would be very very surprised.

To suggest that houses were not undervalued in 2001/2002 is ludicrous.  In large cities like Dunedin where there was no obvious oversupply of houses, you could easily purchase a property for $30,000 rent it out at $180pw to a surplus of tenants while you borrowed the money at 4.99%.  Obviously the market realised pricing was wrong and these properties almost quadrupled within about 2 years.

I bought a house in ChCh for $36,500 in 2001 and rented it out pretty much as is for $180pw.  I bought one in Dunedin for $13,200 in 2001 and rented it at $120pw as is.  I bought an unrentable house (at the time) in Dunedin in 2001 for $2,500.

It's not like the US where cities in the rust belt with tens of thousands of vacant houses many of which were barely liveable suddenly went from being worth a few thousand dollars to being worth $100,000.  Or like in California where hundreds of thousands of brand new homes were being traded by speculators in locations where there was no demand for housing, and then in locations where there was a demand, prices for ordinary homes soared to $700,000 when they had been $70,000 just 10 years earlier.

You see on an earlier comment on this page I calculated a number of options that someone who had $11,000 cash in 1962 plus had the available income to pay rent on the equivalent house (without dipping into the cash) could have taken.

The option of putting the cash in the bank and using the money available for rent to pay rent meant that today that person would have $125,000 in the bank.

If they chose to buy a house and save the money they would've spent on rent they'd have about $2m in assets.

Interestingly prices in 1962 were about double that of 1950, a not dissimilar scenario to today.

I remember doomsdayers (most now defunct) back in 1999-2002 claiming the end was nigh for property and prices would fall 40%.  It was all a load of uninformed codswallop.

Of course over some points in a cycle you will be better not owning property, but this will be only for a brief blip in time.  Prices in NZ are in general not outlandish and in most of the country you could barely replace an existing house for it current market value even with sections at super low prices - hence new home building at 40 plus year lows (which on a percent of population basis is probably all time lows since colonisation).

Now is the time to ensnare a bargain, so don't go crying about how expensive houses are when they continue to climb over coming years.


"I struggle to understand how anyone could honestly believe that house prices will over the long term fall in nominal terms."

Where did I say they will?

And the definition of "long term" varies depending upon who you speak with.

Somebody who has bought a property to live in "forever" is less concerned about price fluctuations than somebody who thinks short term, such as 99% of property investors, who are in it for fast profits now! Now! NOW!

Averaged over very long terms (centuries) property prices trend upwards, but there have been periods in history where the prices have stayed flat for extended periods (decades). The overall trend is still upward when measured between say the year 1600 and the year 2000, but there are (and have been) times when "investment" property is a crippling liability.

But you don't want to hear that, so go ahead and pretend it's not true, and that property is a gift from God to the enlightened.

Taxman forgets an important point in his desperate attempt to justify bank deposits over  property price increases.

A good third or more of any money accumulated in the bankl would have been heavily taxed down to the last dollar.

In the meantime the capital gain on a house bought 50 years would now be totally tax free not to mention the pleasure of owning it. and the tax deductions ( even if minor)  as cream on the cake.

Re the house bought 50 years ago? No one denies that property 'did' work ~ not even me! But it doesn't now; hasn't for several years and may not again in our lifetimes. The party is over. Humm along to the tune of the last song if you like....but it's going to remain just a memory of parties past.

NA at least you've put that in writing and will be accountable in 50 years for your comment. 

One thing you've left out of the equation is inflation.  Perhaps you're right and property will remain 'intrinsically' reasonably static for quite a while. 

But I reckon that if a Big Mac costs $10 - $15 in 2021 due to inflation (a big if but possible methinks if govts continue to print money to pay the interest on their own loans) then the average NZ house price could be circa $2mil also around then.  Of course you'll now argue that wages won't keep up and won't support the mortgages to support an avg $2mil price....but....if farmers in 2021 happen to achieve five times as much for their sheep then their farm hands' wages will rise and they in turn will pay more tax which will enable public servants' wages to rise which will enable the corner dairy owner to put up his prices to counter his cost increases, etc, etc.

After my Dad's 1962 $11,000 house purchase all that sort of inflationary stuff happened...continuously.  From an inflationary standpoint my view is that house prices probably will rise.  We may not be getting intrinsically richer but as a safe store of wealth a property might just be a good bet it has been for the last 50 years.

Personally I think silver and gold could do even better long term as a store wealth...but only time will tell...and you can't live in gold nor rent it out when you decide to do an OE :)

PS - I read somewhere the other day that the US dollar had lost 80% of its purchasing power since the turn of last century (Or maybe it was since the 1930s I'm not sure).  But back then remember a Big Mac was probably worth 10 cents and the average house $500.  Back then people would have said...the party is over...just like you have today.

Am I making any sense to you?



A mate brought start of 2010, the guy who sold it to him paid $260k more than he sold it to him for.  He's in it for long term, family home and all that, but is crying in his milk...just brought down the road, and closer to the beach for another $100k odd less than he did.  Just waiting for someone to tell me a similar story in a year or so!

Ging, sorry to give you an English lesson but please use "bought" instead of "brought".  Does that make sense to you?

FYi - thanks for that...and in there twice as well.  Me no good at skchool, specially learning england...but, yes do understand the difference.  School boy error...this site will keep you busy.  


Yore not alone Ging , some really dumberer bloggers hair . Is ewe got school cert Englush ? Me is . An feeling real goodest two , be smarty pants at beech . Well dunne , guy . You hang in their . ........ Is bestest to lissen to wot otter bloggerers is telling youse , 'cos 'em is edumicated folks ...... Good'uns , dude !

Chairs , from the Gumpster . More to good so to have nice chat hare wit yew .

Oarsome , buddy !

I got 3 fungers n 2 toes...nought teef...those 4 edumicated folks, jus lick sckool. 

3 fungus ?.. Mush room in yore shool , Ging ? ....... Din't waist yer thyme wit dees falls , man . Stick too jess  torkig to ole Gummi ........... Yah !

Ewe & mee , feck the Hickeystericalysing boof-heads ........ Kunst ! ... All of dem .

Nicholas:  History shoulld be your guide. Property prices have been going up in real terms for centuries. All the wealthiest families in the world have huge and extensve land holdings. In historical terms so a flat period of 5-10 years is nothing.

Come back in 10 plus years and you won't be able to even buy the letter  box for what a house costs today.

The present rise in food prices, costs, and other commodities coupled with rising share markets = inflation down the road.

Read how this effected house prices (  which go hand in hand with rents ) in just one corner of the world in the 15-18th centuries in Holland  and is repeated all over the world to this day.




Ah, yes....Holland, BigDaddy ! Perhaps a squiz through the pages documenting the Tulip Bubble might serve you well. It's all about buying, and selling ~ and not being the sucker left with the commodity when the bust arrives. I'd even venture that tulips cost more now then they did centuries ago ( just a guess, mind you!). But that not much consolation to those who got left holding the baby, way back when. So you see, history is my guide......

Olly, that is fine if you're talking about somebody who is in property for the long haul, such as the young couple who buy their home and then sell it decades later for 4 or 5 times the price they paid to help fund their retirement, but most PIs are in it for the quick buck: a 5-10 year long flat spot has them jumping off bridges.

Not to mention that while a sale price that is 4 or 5 times the original purchase price sounds awesome, inflation eats it alive and in real terms they may not be much better off after all those years. Maybe they even went backward, especially when you factor in the enormous amount of interest they paid over and above the purchase price.

You PIs keep telling yourself that property only ever goes up in value and when times are bad and you can't deny that property isn't rising (maybe even falling) in the right now you trundle out the old 'long term' thing, which ignores the fact that almost all PIs aren't interested in long term, certainly nothing much beyond a decade at most. Bad times now are essentially bad times forever to a PI.

BigDaddy, the balls been kicked out of the park. I sugest you move on and get a real job.  


Those wealthy families in Europe had large landholdings and huge power even their own armies, isn't really relavant. I think you will find that pre the second world war inflation was an exception and associated with failing regimes.  A relation of mine told me years ago that the farms price was stable for over a 100 years in the UK ,up to the 2nd world war.

You may not be able to buy a letterbox but not for the reasons you are thinking.

Properties dead, it's alive...round and round it goes.  If you use the dead mans logic, then selling the family home at the moment is the right thing to do...right?  Or are there two sets of rational involved.  Who has the balls to keep out for 10 years? 

Many here sold the family home 2-3 years ago, Ging. The hard part was convincing the wife that 'her' nest would be replaced at some stage. The first 18 months was the hard bit! After that, she quite got to enjoy renting and the extra 'income' from not owning. 10 years? I don't ever expect to own again, as prices will just continuously head down from here.

Your poor wife.

Nothing left for the settlement.

It called 'confidence' SK. Being the 'proud' survivor of half of half, I have stuck to my core beliefs, and have a wonderful 'Mark3'. And just like my  absolute certainty that property will fall, I believe in backing my views - 100%.

Nicholas there are a lot of NZers who have sold their home on the premise that they are going to buy back cheaper. It is a smart thing to do. So many people forget that interest is just paying rent to the bank and for a lot of new zealanders it is very expensive rent. Renting is generally cheaper than interest rates insurance and maintenance. In a dropping market this will be a sensible thing to do for many,especially those with big mortgages.

Almost there point in rushing in is in Marl the prices are falling like a stone and there is no end in sight...pretty much the same situation as the five years following the 87 rout...only this time the main 'industry' is in deep shite with no magic escape route. Massive losses coming to book in the rural areas. Blenheim a service centre with tourism tacked on. Take down the grape industry and it's back to the future. Exodus of those who are mobile. Vacant properties now common. Add in the low income levels in the region and the high % who are elderly and carking it...but hey we have us a multi story car park to be proud of and a forest of parking meters...!

Then hope you didn't buy in Marlborough Wolly and stuck to your boat house.

Well I did actually muzza...but I sold it...some time back....been happy to wait as the slide got going...then the grapes turned pear, the regional exodus of labour kicked into I'm happy to buy the place I want at my price for cash. It was a boat muzza not a houseboat...a houseboat wouldn't last one winter in Evans Bay...

NA - respect your confidence mate.  Personally, not to sure on the never ending slide...still think quality and location, location, location are good bets in the long run.  I've been out for some years too...just decided to go back in.  And before all the derision, no doubt theres more pain in store...but it don't owe me nothing. 

And I have absolutely no problem with that, or anyone what wants to buy their own home for whatever price, or in whatever location, they like ~ as long as they can afford it. And affordability is not only a dollars and cents thing. It's a family and life-balance thing, as well.

Totally agree on that point.  If it turns to complete shite, theres always a cardboard box.  Been trying to find a crystal ball, oddly no many in circulation.  I'm pretty sure some of the folk on this site brought them all!

Never ending slide - tell that to the villas in herne bay and grey lynn that have appreciated 13% over the recessionary year of 2010. (according to QV the unbiased source)

Happy weekend !

Have they really, SK? Or have a number of sales gone though that have pushed up the statistics. Let's say a property that sold for, say, $10 mio in 2006, sold last quarter for $7 million. How does that capital loss get reflected in your 13% 'appreciation'?

The turnover in these suburbs has remained high - so yes the sample is wide - and yes the figures are real - and yes the money being made is real.

And... lost!

That's the best you can do?

Let's do an analogy for you then.

Let's say the Government is going to bring in a luxury car tax on all cars above $100k. ( that's me equating it with a land or capital gains tax, by the way), and all the Merc and Beemer owners decide to bail out before the tax come in on 31st Jan. The sales figure will show lots of high price cars going through the books, probably at a discount to current value to escape the penalty. The stats. will show' car sales values up!". But are they really?

So if: 500 houses sold in Grey Lynn in 2009


500 houses sold in Grey Lynn in 2010,

QV shows at the end of 2010 that the average sale price rose 13%

According to you - this is not valid because you imagine that the 500 Grey Lynn people who sold in 2010 are a different type of people to the 500 Grey Lynn people who sold in 2009


That's Grey Lynn  and Herne Bay, from your original post. So I'd suggest it's a migration down the food chain, in that case. So; Yes, there could be a different demographic in 2010 to 2009. Astons down; Lexus's ( or is that Lexii?) up ~ and the Lexus bods are now driving Toyotas from Mount Eden. Eventually the car market, like the property market will, all ends up.... lower. The secret, SK, is to sell when the opportunity arises; when the Aston people are buying Lexus's......Sell, SK, whilst you can.....

Agree with Ging There are plenty of affordable houses on the market, but not in the main centers..if I wanted a house 100-150k cheaper than where I live in CHC I just to to move 100KM away from CHC..but I like living in CHC as it has the schools for my kids and lifestyle I want...the same for thousands of others hence why price will stablise at a level and wont decline into oblivion. My neighbour just sold, only had the house for two years but made 15K on not everyone making huge losses. But what I do see is that the larger priced houses in the 700-900K mark are sitting on market for a long time...the cheaper houses 350-500K  are still selling quite quickly, of course every area will be different depending on location of course.

Was finding that most of the properties I was looking at were owned by people who have had them before the pre-boom days. A fluke?  For whatever reason, they are selling now...these aren't moving because theres no pressure at the moment. Took a while to find a victim who lived in the right spot.

SK I agree the posh central areas of Auckland are holding up pretty well however I would have thought most of those are owner occupied as they would generally be worth too much to get a decent rental return on. The remainder of NZ is not doing so well.It is steadily declining in value by the month and it does not look like it will stop for sometime and that is not me talking but rather QV and other analysts. Some areas will do better than others. Just having a house to live in is a good position to be in at the moment. Negative gearing is just plain stupid. Red ink flowing all over the place.

Theres blood on the floor everywhere round here...might have another crack when the interest rates start going up.  The peoples saviour over the past 3 years. 

True you need deep pockets or a high risk profile or both to entertain investment properties in these areas.

However - If the scenario is topping rent shortfall up by 5k a year when the capital appreciation is 100k then thats the gamble some are willing to take.

$5000.00 would not pay much interest on the kind of houses you are talking about SK. I think the shortfall would be greater than that by miles. And interest is not the only cost.What about rates insurance maintenance and times you have not tenants. And inflation.  And with the many people going to Australia for the work to be done in Queensland it does not look good for migration. You need to look outside the square and do a bit more than just property. That of course will need some thinking to be done and some research.

So many reasons to batten down the hatches and stockpile groceries.

I'm told that Matua and Pillans Point in Tauranga has been doing well on the property front.

Close to CBD and have a Decile 10 schools

Some areas of cities are doing very well, and inner city areas will have a premium if/when the oil price goes up

Oh yes, I'm certain that if you look hard enough you'll find some PIs who aren't about to go bankrupt and be mortgageed. It may take a while, but persistence has its rewards.

I was always told, and someone correct me on this, but it is  in the model I have always worked on , is that as long as your interest payments on your mortgage is less than what you would have to pay in rent for the equivlant type of house then you should be right? (and you have a job etc etc)

Yes, if you mortgage 100% of the price and intend to not move out of it.