Monday, September 14, 2009

Congratulations, New Zealand

It's been a while since I have noticed a housing market puff-piece in the paper, so it was refreshing to see one on page A2 today.

If I were to ask you what the term "top [10] housing markets in the world" meant, would you reply:
  • a) the countries with the highest volume of house sales?
  • b) the countries with the highest aggregate value of house sales?
  • c) the countries who sent a team of real estate agents to a big international contest where they had to sell houses and lie to buyers and carry an egg on a spoon and came out top?
  • d) the countries that have recorded the lowest drop in house prices over the last year?
  • e) a meaningless load of bollocks meant to encourage the housing market and stimulate real estate advertisers?
  • f) 'd' & 'e'?
The answer is 'f'.

New Zealand has ranked in the top 10 housing markets in the world, but prices have still dropped.

It had one of the smallest price falls lately and is ranked alongside Europe for toughing out the slump.

Real estate consultancy Knight Frank has released its international house price index which compared house price changes in the second quarter of last year with the same period this year.

That showed New Zealand was ninth least affected out of 32 countries.

Ninth! The bad news is we're out of the medals, but the good news is that we get automatic entry to next year's index. Anyway, cue the standard procession of economists predicting things either getting worse or getting better in such a way that at least one (eventually) gets it right, and we don't all catch on that economists are no better at predicting economic trends than coin collectors are at predicting coin tosses.

"It now appears that house prices are starting to stabilise across the world," said Liam Bailey, head of residential research at Knight Frank.

[...] BNZ chief economist Tony Alexander said the list of pessimists expecting house prices to fall was shrinking.

[...] BNZ managing director Andrew Thorburn this week said the country's $130 billion overdraft was unsustainable.

[...] Reserve Bank Governor Alan Bollard also fretted about the housing recovery last week.

"We are always very alert to not wanting to spark off an unnecessary or unbalanced housing revival," he said.

And a final word from Michael Boulgaris:

Real estate agent Michael Boulgaris said cheap money was helping housing recover.

"With the ASB cutting its floating mortgage rate by 65 base points to a new low of 5.75 per cent, the spring property boom is yielding increased confidence among buyers, vendors and agents," he said.

He had a TV show, don't you know. Don't worry mate, keep repeating the mantra and you'll convince yourself it's true.

Meanwhile, for those hoping to lord it over friends, co-workers and loved ones from lower-performing housing markets, here's the helpful table from the print edition:

Take that, Bulgaria!


  1. You'd half expect Zimbabwe to be top of the list, with the price of a single banana one day being the same figure that a house was the day before.

    Oh but look there's Israel. Haven't figured out what the similarity is there but I'll enjoy working it out I'm sure.

  2. okay let's look at this from a neutral perspective.

    70 per cent of New Zealanders lived in owner-occupied properties in 2001. I don't know, but I presume, that this level of ownership remains largely the same, and I'd speculate it's actually risen.

    Therefore: a majority of New Zealanders have a lot of money tied up in their homes. Homes are increasingly being used as investments given the falling values of pensions and poor state provisions. They need to be future proof.

    We are in the middle of a global economic crisis, perhaps the worst seen for a number of decades.

    The news that, despite all this global turmoil, which has a property bubble at its core, the value of property in this country has remained largely stable.

    Countries such as the UK and the US have seen values fall sharply, trapping many people in negative equity. Furthermore, in countries such as Israel and parts of the UAE, values has fallen through the floor.

    So you don't think it newsworthy to point out that the investments made by New Zealanders in their homes have so far escaped all the troubles that have beset many western countries?


  3. oops correction: Israel is at the top not the bottom!