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

[Chris W]

After the biggest crash in house prices we see housing still manages to match inflation.

Don't understand your comment. Can you clarify your comment with a detailed example of Auckland or Wellington on how housing manages to match inflation?

[twofatladies]

For those unable to see or unable to connect the dots:

In Nov 2014, the REINZ median house price in Auckland was NZ$676,000.

The inflation adjusted value equivalent of that amount today would be NZ$940,941.

The latest REINZ median house price for Auckland is NZ$940,000.

So inflation adjusted house prices in Auckland are back to levels last seen almost 12 years ago.

Chris - you provided the figures: Nov 2014 inflation adj = $940,941
Latest figure = $940,000
Same figure - change in house prices matches inflation.
Or have I read that wrong?

[donna]

^^ seems correct to me and what you're alluding to is if the worst case is matching inflation - that's not altogether bad.

However, while it works if you bought 12 years ago, the result is not good if you bought just a few years ago. For example - a home bought in 2022 for 1m would need to be worth 1.15m today - instead it is likely worth less than 770k (esp. if it's in WGN).

[Chris W]

Chris - you provided the figures: Nov 2014 inflation adj = $940,941
Latest figure = $940,000
Same figure - change in house prices matches inflation.
Or have I read that wrong?

Another example for you.

In March 2017, the REINZ median house price in Auckland was NZ$900,000. The inflation adjusted value equivalent of that amount today would be NZ$1,223,100

The latest REINZ median house price for Auckland is NZ$940,000. (i.e. 23% below the inflation adjusted price of NZ$1,223,100)

So current house prices in Auckland are below inflation adjusted house price levels from over 9 years ago. (i.e market prices of dwellings in Auckland have not kept up with inflation since March 2017)

Remember how property promoters were repeating the message that real estate is a hedge against inflation?

[twofatladies]

Now you're cherry picking dates to suit your argument.
Any recent dates will show housing has performed poorly - we all acknowledge that. Even the spruikers.
But the gains made in earlier years are pretty impressive.
What's driving you, Chris?

[twofatladies]

I asked AI this question: NZ housing prices have increased steadily over the years but not the last 5 years or so. Overall, has housing been a good investment?

[Chris W]

Now you're cherry picking dates to suit your argument.

People are free to choose to believe what they want to believe, however people are not free to choose the consequences of their choice.

Pick any dates you want. The underlying premise is proven to be incorrect for many buyers who made that premise. Lives have been changed as a result of a belief in a flawed premise. That premise was repeated frequently by the property promoters with their vested self interests. There are many more flawed premises repeated frequently by those with vested self interests.

But the gains made in earlier years are pretty impressive.

The key question is, will these rates of historical growth continue from current price levels in Auckland?

[Chris W]

Out of China

Inflation adjusted real estate prices. Latest official data.
Observations to note:

1) -22.9% from peak in 2021
2) back below levels in 2Q2005 - 21 years ago.




Anecdotal stories of real people affected.

1) from fear of missing out to financial misery - https://youtu.be/Hx6OhUzoS9A


2) Shenzhen - https://youtu.be/bXUwOEDHSGw

3) buyers from Evergrande

https://youtu.be/zm4FoPmF-wg

Is real estate a hedge against inflation?

Look at evidence above out of China.

People are free to choose what and who they want to believe, however people are not free to choose the consequences of their choice.

[Chris W]

Consequences of one of the largest asset price bubbles in the history of NZ.

1)

2) https://www.oneroof.co.nz/news/has-t...revealed-50098

3) https://www.rnz.co.nz/news/business/...operty-breakup

4) https://www.rnz.co.nz/news/personal-...th-in-property

[Chris W]

These outcomes are the consequences of one of the largest asset price bubbles experienced in NZ.

[Chris W]

Consequences of one of the largest asset price bubbles experienced in New Zealand.



Some recent buyers have posted anonymously on social media in recent weeks, sharing the human implications of the downturn.
One said they were separating from a partner and worried that their townhouse would not sell because next door was vacant and had not sold. "Our CV is down by $100,000 from our purchase price. Either way we will be in debt with mortgage repayments even if the house sells."

Another who said they had bought a house in 2023 had seen their house value drop $80,000, even though they missed the peak.

"When you add the $35,000 agent fee to sell, we've lost half our deposit."

Another said they had been left jealous of renters. "I bought at the peak in 2021 and the house has dropped at least $200,000 easily. It's taken years to accept this is one financial mistake I've made which won't kill me but still hurts."

Some buyers talked about being stuck in townhouses and apartments longer than they intended to, because they had listened to advice that they did not need to buy a "forever home" first up.

"For those 3600 households, this is real and it is painful. Negative equity is a balance-sheet problem, not a cash-flow one, as long as they keep servicing the mortgage. The bank is not calling the loan provided they keep paying. But it does trap people: they cannot easily sell to move for a better job, and they cannot use their home as collateral to start a business. So there will be individual stories of lost opportunity.

https://www.rnz.co.nz/news/personal-finance/1237240/we-ve-lost-half-our-deposit-about-4000-first-home-buyers-owe-more-than-their-homes-worth

[donna]

They only lose if they sell - so they should do all they can to 'not' sell! Yes, the dip is unprecedented in our lifetime - it is what it is, and while it's human nature to direct blame at someone or some group, it's pointless.

Focus on what you can control - everything else is negative energy, and it will likely cause health issues. Did you know the average time to own the same home in NZ is 10.6 years.

Well if you bought in 2021 or 2022 - and you sell in 3032 - there's a huge chance your house will be worth more than you bought it for. Or as Jeffa says - it may even double in value!

[Chris W]

I mean, how many times have we all been at a party or social event and had to listen to some low IQ big mouth dork go on about how sure fire property investment is. And the other tards all follow in.

Greed and lazyness gilnt in their beady little entitled eyes.
Your cautions about cashflow, and saturation and inflation, all drowned out by the smuggification.

This is what happens in an asset price bubble. People confuse an asset price bubble with their own genius. The promoters with their vested selfish interests (and undisclosed conflicts of interest) vilified, attempted to discredit, and used negative labels to describe those who gave price risk warnings.

People are free to choose to ignore the price risk warnings, however people are not free to choose the consequences of their choice.

https://newsroom.co.nz/2026/09/06/how-the-87-crash-shaped-a-generation/

https://www.oneroof.co.nz/news/has-t...revealed-50098

[donna]

^^ self-inflicted! NZers borrowed from everything (property, businesses etc) to buy shares and then there was the crash!

[Chris W]

Another example for you.

In March 2017, the REINZ median house price in Auckland was NZ$900,000. The inflation adjusted value equivalent of that amount today would be NZ$1,223,100

The latest REINZ median house price for Auckland is NZ$940,000. (i.e. 23% below the inflation adjusted price of NZ$1,223,100)

So current house prices in Auckland are below inflation adjusted house price levels from over 9 years ago. (i.e market prices of dwellings in Auckland have not kept up with inflation since March 2017)

Remember how property promoters were repeating the message that real estate is a hedge against inflation?

https://www.stuff.co.nz/home-property/361030628/why-you-can-buy-house-today-essentially-same-price-9-years-ago