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Has anyone witnessed firsthand a property price bubble? What does it look like?

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  • Has anyone witnessed firsthand a property price bubble? What does it look like?

    Just wondering if anyone has witnessed firsthand a property price bubble and can share their experiences

    1) what did you see was happening at the height of the property price bubble?
    2) what happened afterwards?

  • #2
    Google mate.
    Squadly dinky do!

    Comment


    • #3
      We've never had one in NZ so you may not get many witnesses.
      At least, no living NZer has experienced one in NZ.
      Some countries have had housing bubbles that burst - you should google them.
      NB If it doesn't burst then it wasn't a bubble.

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      • #4
        Originally posted by Bob Kane View Post
        We've never had one in NZ so you may not get many witnesses.
        At least, no living NZer has experienced one in NZ.
        Some countries have had housing bubbles that burst - you should google them.
        NB If it doesn't burst then it wasn't a bubble.
        Hint Bob: 1987...
        Squadly dinky do!

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        • #5
          Hint: check the property price index.
          How big was the drop and how long before it recovered?
          The sharemarket tanked but housing didn't.

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          • #6

            The trend is up, but couple of dips there mate.
            Squadly dinky do!

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            • #7
              Going from memory - yeah, that could be a risk - any dip in one quarter was matched by a gain in the next.
              So we didn't have a crash, just a few dips that quickly recovered.
              It was carnage in the rest of the NZ economy but housing was pretty solid after 1987.

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              • #8
                Originally posted by Bob Kane View Post
                Going from memory - yeah, that could be a risk - any dip in one quarter was matched by a gain in the next.
                So we didn't have a crash, just a few dips that quickly recovered.
                It was carnage in the rest of the NZ economy but housing was pretty solid after 1987.
                You were an adult in 1987?
                Squadly dinky do!

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                • #9
                  I was and I can vividly recall the mortgage interest rates, back then.
                  Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

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                  • #10
                    Originally posted by Perry View Post
                    I was and I can vividly recall the mortgage interest rates, back then.
                    1970-75 was a major dip!

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                    • #11
                      Originally posted by Davo36 View Post
                      You were an adult in 1987?
                      Obviously I have a gap in my education.
                      I'm happy to be corrected.
                      Why don't you explain what happened to residential housing in 1987 and the next few years.
                      Perhaps some examples of property prices might help me understand better.

                      Comment


                      • #12
                        Originally posted by Perry View Post
                        I was and I can vividly recall the mortgage interest rates, back then.
                        Good.
                        You would have noticed that the mortgage rates of 21% at the start of 1987 reduced to about 12% a few years later.
                        What did that do to house prices?
                        In your opinion, was there a crash in residential house prices over that time?

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                        • #13
                          Originally posted by Davo36 View Post

                          The trend is up, but couple of dips there mate.

                          Here is the chart for both nominal and inflation adjusted prices (also referred to as "real"). From RBNZ house price study dated January 2016


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                          • #14
                            The red line seems to be going only one way to me.
                            And that is with a log scale.
                            Is the only dip around 2006?

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                            • #15
                              Thanks for posting that graph, Chris.
                              So far we are having trouble locating someone who has seen a property bubble in NZ.
                              Hopefully they will appear soon and enlighten us with their wisdom.

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