We are not alone when it comes to property prices

Election night crowd, Wellington, 1931 -  Photographic Archive, Alexander Turnbull Library, National Library of NZ

Election night crowd, Wellington, 1931 - 

Photographic Archive, Alexander Turnbull Library, National Library of NZ

Have a read, if you will of this article which was published last Saturday, the 15th September regarding the trend in house prices over the past 5 years.

"House prices have become so dull that it is tempting to think they are no longer the mainstay topic of conversation at dinner parties.

Since 2009, the two major yardsticks of house prices – QV and the Real Estate Institute indices – have been broadly flat, rising in mid-single digits in 2009, then seeing either small falls or rises in 2010 and 2011.

The lack of direction in the market has surprised many, not least the real estate industry and the banks.

At the start of 2009, there were those who predicted a 15 per cent fall in prices.

The REINZ Stratified Price index ended the year six per cent up. While market predictions proved closer to the mark in 2010, in 2011 the commentators expected a fall of more than six per cent. The index rose by 3 per cent.

But many commentators still predict dire falls. Sceptics say prices remain above long-term trends for affordability. The average house price on REINZ 2011 numbers was 4.7 times the average salary, against a long-term average of four.

The flat market also disguises two trends. Stripping out inflation, house prices have fallen. And there has been a well-understood divergence between prices in Auckland and elsewhere.

So where next? Analysts foresee a flat market followed by slow growth. This still means falls in real terms, but it is a lot better for homeowners than the nightmare predictions.

Mortgage availability is improving, though slowly, with lenders offering higher multiples of salaries and higher percentages of buying prices.

Meanwhile, with rents rising significantly, buy-to-let opportunities have become more attractive, bringing other buyers into the market."

Now having read this piece, let me tell you firstly that I did not write it.

This article was published in the UK last Saturday - it was not an article about the NZ property market. (I have ammended the article by inserting NZ stats and references).

The fact is that the original UK article which I have pasted in full below for comparison, was written about the UK property market. What is so striking is the similarity - line by line, fact by fact the parallels are uncanny. The UK property market would from this comparison appear to have gone through a near identical rollercoaster ride as the NZ market over the past 5 years. To be clear the article above has been changed by me to include the references to data sources (with links) and to the actual NZstatistics.

Now here is the UK original article.....

TAKING STOCK: Slow growth coming but house prices are set for real-terms fall

By ALEX HAWKES

House prices have become so dull that it is tempting to think they are no longer the mainstay topic of conversation at dinner parties.

Since 2009, the two major yardsticks of house prices – the Halifax and Nationwide indices – have been broadly flat, rising in mid-single digits in 2009, then seeing either small falls or rises in 2010 and 2011.

The lack of direction in the market has surprised many, not least the City.

A report by niche broking firm Redburn this year highlighted the fact that the futures markets, set up to enable people to bet on the direction of house prices, had got things badly wrong.

At the start of 2009, futures traders predicted a 15 per cent fall in prices.

The Halifax index ended the year five per cent up. While market predictions proved closer to the mark in 2010, in 2011 the City expected a fall of more than six per cent. Halifax’s index fell just two per cent.

But many commentators still predict dire falls. Sceptics say prices remain above long-term trends for affordability. The average house price on Halifax’s 2011 numbers was 4.4 times the average salary, against a long-term average of four.

The flat market also disguises two trends. Stripping out inflation, house prices have fallen. And there has been a well-understood divergence between prices in the South East, particularly central London, and elsewhere.

So where next? The Redburn analysts foresee a flat market followed by slow growth. This still means falls in real terms, but it is a lot better for homeowners than the nightmare predictions.

Mortgage availability is improving, though slowly, with lenders offering higher multiples of salaries and higher percentages of buying prices.

Meanwhile, with rents rising significantly, buy-to-let opportunities have become more attractive, bringing other buyers into the market.