How this current housing boom is different

PHOTO: Ashley Church. Photo credit: The AM Show

A property investment expert has claimed if you put on a blindfold, stick a pin into a map of New Zealand and buy a house wherever it landed, you’ll make money.

The problem is, prices are getting so high even people with equity in their own home will soon struggle to have enough to buy an investment, says Ashley Church, former head of the Property Institute of New Zealand.

House prices have skyrocketed in the past 12 months. The latest evidence comes from Trade Me, which on Thursday said asking prices were at all-time highs in almost every region, with the median nationwide now $762,700 – slightly above the Real Estate Institute of New Zealand’s figure of $749,000.

“Normally what would have happened under this cycle is the Auckland property market flattened off around 2016, 2017, pretty much right on cue – that’s what you would have expected if it followed its previous trajectory, which it did,” said Church, who recently claimed the housing crisis doesn’t exist and that there’s little the Government or Reserve Bank can do to cool the market, told Magic Talk on Thursday.

“You would have expected it to have been starting to pick up again sort of midway through 2021, or towards the end of 2021. The fact it started a little bit earlier is unusual, and it’s almost certainly to do with the fact we’ve had that rapid decrease in interest rates over the last few months as a result of COVID. You can safely say the Auckland market has taken off again.”

He went on to say there’s something different about this particular housing boom.

Usually, “when Auckland goes off the boil, the rest of the country carries on reasonably strongly… it then comes off the boil and Auckland takes off again”.