COMMENT: Watching the Olympics reminds me that we Kiwis are a funny old lot when it comes to supporting national sport. In most disciplines we’re happy just to see our teams participate and when we win, which we do more often than we should relative to our population, we celebrate with good grace and a humility which has traditionally been one of our more attractive cultural qualities.
Except when it comes to All Black rugby and Americas Cup yachting.
Where those two activities are concerned, we expect nothing less than demolition of the opposition. Such is our confidence in the superiority of our teams that simply winning isn’t enough. We have to wipe the field with the other side in a display of one-sided dominance, to be regarded as having “legitimately” won.
This trait is particularly pronounced with rugby where a win of anything less than 7 points can plunge the country into a period of garment tearing and introspection, accompanied by calls for the coach to be replaced and the team to be overhauled.
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But this unusual trait isn’t just confined to sport. We also do it with the property market. Over the past 40 years, house prices across most parts of the country have broadly doubled every decade – a trend which has become so regular and predictable that those who have been around the market for a while now essentially take it for granted. So much so that, as with tight winning margins in All Black rugby, a slowdown in house price growth can generate negative headlines and warnings of pending doom in the property market when, by any reasonable analysis, the market is still strong.
We’re seeing it right now, with headlines that are talking about the market slowing. Such headlines sound worrying until you read the detail and discover that what they actually mean is that house prices are still going up, just not as quickly as they were a few months ago.
So what’s really happening? Are the measures taken by the Government and the Reserve Bank earlier this year starting to have an impact? Should we be concerned? Is the housing market coming off the boil?
Ashley Church: “Even the All Blacks can have a bad game (by their own high standards).” Photo / Ted Baghurst
The answer to the first and second question is almost certainly no – and the answer to the third will depend on where you are in the country. Let’s see if I can unpack what’s happening and bring some common sense to bear.
First up, you simply can’t judge the property market based on one-off data. The market is a cyclical beast and it’s only when we stand back from it and look at what it does in broad sweeps over months or even years that we truly get a sense of what it was doing at any given point in time. While the trend of the Kiwi property market has been upward for the past 40 years, it moves up and down in any given month – so using that momentary data as the basis for long term predictions is the pursuit of the foolish.
Secondly – and I can’t stress this enough – house prices are still going up! According to the latest OneRoof stats, the national median property value rose by “just” 5.5% over the past three months – and “just” 4.3% in Auckland over the same period.
The closing months of 2020 and the first few months of 2021 were extraordinary in terms of house price growth, and the factors which caused that to happen were unique. The current growth in house prices is more in line with what we might historically expect and rate of growth we were experiencing a few months ago was never going to be sustainable.
Finally, if you follow my property ramblings, you’ll know that I make a distinction between Auckland and the rest of the country. As a general rule, Auckland is about three years ahead of most of the rest of New Zealand and prices there were predicted to start increasing in 2020 after three years of being flat (which they did).
Conversely, most of the rest of New Zealand should have started to come off the boil in 2020 and stayed flat until around 2023/24. The fact that this hasn’t yet happened means that regional markets are currently defying market history and, in my opinion, they’re now overdue for their cyclic slowdown (which will have absolutely nothing to do with Government or Reserve Bank measure).
Even the All Blacks can have a bad game (by their own high standards) – but it’s their winning record, over time, against which we judge their historical success.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
