House prices are collapsing dramatically across the nation. As there’s approximately twice as many home-owners as renters, this is unwelcome news for most folk.

Exactly two years ago on this blog I predicted this would occur as a direct result of some mind-blowingly stupid government actions at the time.

All prices are set by supply and demand. Two years ago demand greatly exceeded supply with housing. The latter factor was a direct consequence of the government’s screaming incompetence. I outlined a way to rapidly increase supply to balance demand inside a year.

That said, at the time, the prices were also driven up by mortgage availability at historically and artificially ridiculously low interest rates.

The then taxpayer money bribed media were uncritical of the government’s incompetence. Today, they regularly run stories of desperate house-owners unable to pay the current house mortgage rates. Note however, these rates are still marginally cheaper than post-war norms. Also, most home-owners are unaffected having either no mortgage or a relatively small one they have been paying down.

All things being equal, that is no mass population exodus for example, the ultimate value of houses in a balanced demand and supply situation will be set by their replacement cost. For a number of reasons building costs are currently soaring so, for example, the 20% price collapse in the Wellington region will be recovered inside three years. In ten years time today’s house prices will seem like a give-away.


10 years !
Can’t we speed that up ?
want out… of country

Couldnt agree more Bob I cant understand why current house prices have dropped so low when to buy a section and build new has increased so dramaticlly in the other direction.

Well said Sir Bob I agree

“In 10 years time today’s house prices will seem like a give-away”.

I agree but primarily because we do not and will not have the capacity to build houses at the rate demand generates.

Add in the RMA and any racist revisions and supply will be a major issue.

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