There are no shortages of people wanting to go on the record as to when property prices will rise again. I must admit though that there is a certain curiosity about their logic – prices fell so they will rise they say. That might be the case in some parts of the market, but what about if housing doesn’t remain a generational one-way bet on even shitty houses in mediocre spots? It was a pleasure to talk to Susan Edmunds of Stuff on the subject.
The following are excerpts from our interview, which are drawn from the article linked to here.
Economist Benje Patterson cautioned that recovery was still likely to be some way away.
“It has only been a few months of declines, and mortgage rates still have a bit to play out at a time when household and business confidence is low. You are unlikely to see any major parts of the market begin stabilising until 2023 at the earliest – and that will be contingent on the top being found for mortgages and economic confidence beginning to recover,” he said.
But he said the “one-way bet” on housing, where it only ever seemed to make people money, was gone.
“The reality is that houses are just so expensive relative to our incomes, financing and regulations are unlikely to ever be as conducive to housing as it has previously been, and attitudes are shifting with the younger generation. These changing attitudes aren’t a bad thing, as it’s been a pretty stupid waste of capital perpetually bidding up the prices on mediocre houses rather than investing our cash into things that are productive and can actually earn the country better incomes.
“That’s not to say there won’t be markets that go better than others, such as areas where there has been major improvements to job prospects or in a market that has particularly low supply and is an especially desirable spot. The latter is one of the reasons markets like Queenstown Lakes seem to have bucked the trend for now as the tap has been turned back on for tourism.”