Very sobering reading from Bernard Hickey, saying that;
New Zealand’s housing market is so overvalued and wages are growing so slowly that we at interest.co.nz expect median house prices will not rise back above their November 2007 peaks until 2018 at the earliest.
The size of the bubble is so large it may take until 2028 before prices recover and people who invested in 2006 and early 2007 start seeing capital gains again.
I’m not sure if the 2018 or the 2028 figure are the correct ones but either way I’m glad I don’t have significant exposure to residential property!
Wow, I’ll take the opposite side of that bet.
That’s great publicity for Hickey and his website.
I think he is being a bit too pessimistic. There will be more waves of immigration in the coming decade and nobody can possibly predict the outcomes of the coming global economic shakedown. The house price boom was off a relatively low base remember.
I don’t actually care. I still need somewhere to live and won’t be selling into a falling market anytime soon.
Olly Newland must be a very satisfied man right now. He wrote “When the Bubble Bursts” about 5 years ago predicting the inevitable, but most people were too caught up in the euphoria to listen.
To me the interesting aspect will be how the banks deal with the 100% + mortgages they lent out to local “Sub Primes” in the last couple of years. Will they sit back and allow the borrowers to make their regular payments, or will they panic and start demanding extra security to cover the value of the loans?
My pick, unfortunately for the borrowers is the latter. I’d love to be proved wrong, but banks aren’t known for their big picture thinking.