"it will take 30 years to recover"

[Orkibi]

Bernard Hickey say in his new Video blog that it might take 30 years for property prices to get back to the Pike $ of 2007.

he is the biggest scaremonger in the country...

http://www.interest.co.nz/ratesblog/...on-back-to-74/

[SuperDad]

Originally Posted by Orkibi

he is the biggest scaremonger in the country...

I read the blog today.

I guess we will know in 30 years time.

Paul.

[Gatekeeper]

Surely this graph of real house prices shows that the supposed property cycles people seem to believe turned full circle in 87 and again in the early nineties were nothing more than blips. I certainly don't remember them as great events, although I did buy at the bottom of these blips.

The true turn of property cycle goes back to the 70's IMHO.

Hickey's commentary makes sense to me.

[whitt]

If you allow for a dip in graph shown above then project values forward. I guess his comment does have some merit.
But it fails to allow for other influences on the property cycle. Immigration etc.

[Gatekeeper]

Because it's a monetary phenomenon, not caused by, only influenced by immigration amongst other influences.

[Orkibi]

this graph show that property values in the 70s were almost the same as in Early 2000.

definitely contradict the theory that P.I values duple every 10 years.

say a property was worth 50k in 1975, and 100k in 1985, 200k in 1995.

am I missing something?

[SuperDad]

Originally Posted by Orkibi

this graph show that property values in the 70s were almost the same as in Early 2000.

definitely contradict the theory that P.I values duple every 10 years.

say a property was worth 50k in 1975, and 100k in 1985, 200k in 1995.

am I missing something?

Yes.

You are missing the distinction between nominal and real values.

Paul.

[Orkibi]

Yep got it ,

thanks paul.

[Orkibi]

so talking on buying power for your $, 25 years in the graph and you are at the same place.

thats why counter cycle investing is so important,if one buy at the low value phase and ride the way up he gets a bigger bang for the buck and increase his REAL buying power.
thats common sense.

Considering the graph the "REAL"(to get to the same buying power level) cycle is 25-30 years.??

[kieran]

Gatekeeper,

Your graph is simply the property price INDEX level (not the actual % growth of values) so it does not clearly reveal the actual cycles that occured. It also only shows REAL value growth (excludes inflation i.e. NOT the ACTUAL value dollar growth in property values but the $ value after deducting the rate of inflation from their ACTUAL $ values!) rather than NOMINAL value dollar growth (which includes inflation i.e. the ACTUAL $ value of a property).

Real value growth is purely academic and not a true reflection of property values because they do increase by the rate of inflation in actual $ terms which is historically proven. Yes we may be thrown a liferaft in the form of high inflation through the current slump which will translate into supporting ACTUAL house prices to some degree!

Cyclical growth and retractions occur in each cycle as those who have owned property over several cycles have experienced 1st hand. We did have a boom slump and recovery phase within each of the 4 cycles since 1970.