The world’s frothiest housing market is getting a reality check — and it may be a harbinger for the rest of the world. Once at the forefront of the pandemic property boom, New Zealand saw median home prices plunge 8% in June — after annual gains of nearly 30% in 2021 — and transactions plummet almost 40%. Economists think there’s more room to fall further, as much as 20% from the late 2021 peak.
“It’s not unreasonable to look to New Zealand as the canary in the coal mine,” said Sharon Zollner, ANZ Bank’s New Zealand chief economist. “Interest rates have been rising here for about a year now, which does put us well ahead of the pack. The themes we are seeing here are very similar to what’s happening in the US and Australia.”
So they may just fall to the already ludicrous prices of early 2021…tragic!!
The fall from it’s peak will more than likely be around the 45-45% mark…maybe even more…and it will hang around there for quite some time ….years….not months.
The fundamentals are so far out of whack it not funny and it is going to take a long long time to equalize and sort it’s self out.
Statistics 101…Everything, eventually, regresses to the mean.
Physics 101……For every action, there is an equal and opposite reaction – Newton’s third law
It is impossible to get around those two laws with out having some serious downside carnage on the other side occur.
I am old enough to remember when property prices barely moved for 10 years or more. Nobody talked about. Nobody worried about it. People just lived in their houses no matter what the price was and got on with life.
The continuous obsession with house price rises over the past decade or more has been pure insanity.
I have no particular sympathy for people who have bought into the market the past 4 years or so. It’s caveat emptor.
The warning bells have been ringing loudly for a long time now. Everyone bar those living under a rock have known about it. That’s life !
Grant,
“I have no particular sympathy for people who have bought into the market the past 4 years or so. It’s caveat emptor”
Not everyone that has purchased a home is a wealthy investor. There are big numbers of young kiwi families that needed their own home. You can’t expect them to delay buying a home based on what may or may not happen at some point in the future. We all knew house prices were OTT for some time but I don’t accept what unfolded in the market from March 2021 was predictable. Almost every expert or alleged expert predicated house prices would drop by around 15% when Covid arrived hence the Reserve Bank Governor reintroducing the LVR’s. Instead house prices went up over the next 9 months by a staggering 25%+. If they could be so far out, how can we expect young families to be more “informed”?
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