Shades of 2008. Back then after the banking crisis every economist as now, wrongly predicted a massive price collapse in Auckland house prices. Some such as Bernard Hickey and Shambles put their money where their mouth was, sold up and shifted to Wellington, in the process blowing small fortunes.

Back then the economists were all talking nonsense. I received a call from TV One’s Sarah Bradley, host of the 9-12 morning show on this topic and told her the economists were talking rubbish. This resulted in me doing a weekly half hour stint for a couple of years, until I tired of it.

As I said on television, back then, Auckland was the fastest growing city in Australasia, there was a huge shortage of Auckland houses and prices are set by supply and demand, ergo, far from collapsing they were on the cusp of a boom, all of which duly occurred.

So here we go again. What’s different this time? Well certainly not demand exceeding supply. But we don’t have massive immigration as back then. More pertinent the Reserve Bank has removed the minimum deposit stricture while interest rates are at an all time historic low. It’s a buyer’s dream situation.

The government’s efforts to partly underwrite small business victims of the ill-considered lockdown by partly guaranteeing interest free bank loans has been both a failure and exposed their naivete. That’s because banks are rejecting most overtures, knowing many of the applicants are irretrievably ruined. They naturally don’t want the time-consuming money-losing mopping up mess on their hands.

On the other hand they’re eager to provide house mortgages. I suspect residential agents have a very good year ahead of them. But once balance is restored, without large scale immigration, there will not be the price boom of recent years.

One cautionary note. The unquenched demand is for family homes. On the other hand we’re looking at a glut of apartments in Auckland, developers as is their age-old wont, having hugely over-supplied the market. It is Auckland apartments and not houses which will see a value collapse. Apartment purchasers who are patient and wait 6 months or more will buy well.

Wellington, currently a popular destination for a number of reasons, will not see a house price collapse for similar demand exceeding supply reasons. Its apartment supply and demand position is more balanced than Auckland so similarly a price collapse is also unlikely.


As I’ve noted possibly only Reserve Bank Governors have a worse track record of predicting house prices.

Working from home can only increase their value and demand for quality.

Years ago I went to a BNZ talk by their Economist saying how wonderful things were–the very next day the GFC rolled into town.

Interesting as westpac & BNZ are predicting 7% & 12% falls respectively!

Virendra Kumar Gupta May 15, 2020 at 10:14 pm

The highest in increase in median price in April 2020 came from Apartment Sales in Auckland Central as both investors and first home buyers are making it a multi – offer situation leading to the highest price for the seller and banks are helping both type of buyers with the new LVR restrictions uplifted for upto a year. With more jobs in Auckland and Migration from regions already on yhe increase and interest OCR increase on hold at 0.25 % for a year with room for negative interest rate , market would take a wind soon after winter .

Keep up the excellent publication Bob. I admire your work

My, how our socialist town planners will despise your “the unquenched demand is for family homes” comment. They all want us to live in ‘environmentally friendly’ replicas of Grenfell Tower.

Any thoughts on NZ’s 2nd largest city Christchurch?

A question, a little off topic perhaps. Having been away for some time I am wondering what skills and credibility Grant Robertson brings to his current role. He is defining a spending spree of the NZ taxpayers money, current and future, that is without any historical precedent. Who shapes that usage, or abusage, of the resources of NZ ? There are already many examples of the incompetence and arrogance of senior civil servants in their decision making, so is this going to be another rolling car crash of policy ineptitude ?

Mat , if you talk to any Real Estate agent , NOW is the best time to buy !
Their PR is relentless in its’ positivity.
We could all take a leaf out of their book right now.

Just discovered this hence my late reply. The elephant in the room is surely the coming 25% unemployment which will undoubtably give the housing market a bit of a clip around the ears…

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