If you get a chance today, make sure you check out the above segment from New Zealand’s TV One on the run away Auckland housing market, where the median house price has risen in value by 15% over the past year to more than $600,000, and values are currently tracking 19% above their 2007 peak (see next chart).
All the elements of a bubble are evident, including:
- Panic buying by first home buyers for fear of missing out;
- Rampant investor speculation and “no money down, get rich” investment seminars;
- Expectations that Auckland house prices will continue to rise, with claims of a further 30% upside to prices;
- Easy credit mixed with land supply restrictions; and
- Heavy buying from foreigners.
Watching this video reminds me of Australia in the early-2000s, when the likes of Henry Kaye were running investment seminars teaching buyers how to buy property off-the-plan without a deposit, and a spate of property flipping shows graced our TV sets.
I can’t see how this can end well for New Zealanders, who already hold a disproportionate amount of their wealth in housing (see below IMF charts), or their (our) banks.
