Plenty of us say we want cheaper house prices, but do we really mean it?
Once you own a house, you usually have mortgage on it. The less your house is worth, the less equity you have.
Your net worth goes backwards.
In New Zealand, half of the average household’s wealth is land and property.
That is now worth 1.9% less today than it was a year ago.
Overall household wealth in this country has basically been flat for four years. That means we’re not getting richer and it’s because house prices have been soft.
Is this what you want more of?
This election there are parties planning to tax those assets. From capital gains to land taxes. That is likely to mean even lower prices.
When this happens, we get a bit worried about our situation in life and we get gun-shy with the debit card.
We stop buying stuff. We’re less confident. The economy slows down as a result.
Again, is this what we really want?
Now I know what you’re thinking, that’s all fine unless you’re trying to buy a house. Which is fair.
Except that house prices are now the cheapest they’ve been in a decade.
Cotality says the national house value has dropped to 6.7 times your income.
In 2021, it was nearly 10 times your income.
In Auckland, you can’t sell an apartment or townhouse for love nor money.
The question now is how low is too low?
Ryan Bridge is a New Zealand broadcaster who has worked on many current affairs television and radio shows. He currently hosts Newstalk ZB's Early Edition - where this article was sourced.
11 comments:
Yes hilariously our genius political parties have destroyed the one way the vast majority of Kiwis were actually able to accumulate wealth, namely the housing market. They put in the foreign buyers ban, wildly and recklessly zoned Auckland for a million or two new houses without infrastructure & now threaten capital gains tax on property. Should there be high yielding alternative local investments to substitute into that maybe fine. But there aren't. Since housing reform was not combined with any other substantial reform, like slashing corporate tax rates, there's nothing left. Instead only a group of underperforming NZX 50 stocks, run by inbred chumocracy accounting and legal matey mates, most of whom have presided over crashing share prices of their outfits. Yes, go buy Air NZ which is about to bankrupt & be bailed by government. Or Spark. Or Ryman. Or Fletchers. Or SkyCity. Our parliamentarians are geniuses at destroying value. Maybe our Universities can add value. Oh hang on, Otago is run by a guy called Grant Robertson. NZ needs an overhaul.
A land tax will send many kiwis over the edge. Especially on top of rates.
It doesn't matter what the property prices will be when you are talking about taking a cut from a 6 or 7 figure valuation.
It's a despicable and nasty idea that punishes those who worked hard and made large sacrifices to spend decades paying off a mortgage.
Property is a "non-liquid" asset and property owners paying a mortgage will be even more severely punished.
The "gap" between have and have nots will just become an enormous "chasm" extending beyond the horizon.
This is what happens when socialism and Marxism take control. We were warned but no one apparently listened.
Ryan, The legendary investor Warren Buffett once noted that if you plan to be a net saver over the next 20 years, you should welcome low asset prices. It is a logical premise, yet one that seems entirely lost on the average New Zealand investor.
Robert, the fundamental flaw in your argument appears in your very first sentence, where you claim property is “the ONE way the vast majority of Kiwis were actually able to accumulate wealth.”
This line of thinking highlights the exact vulnerability of the New Zealand market: a narrow-minded reliance on a single asset class with no alternative plan. A decade ago, pure speculation gripped our housing market. That was when I bought my last residential property circa 2016. I then watched people do 'dumb stuff' and act irrationally. I completely exited physical real estate in 2021 and have no intention of returning.
When macroeconomic environments, government policies, market dynamics, interest rates shift—as they drastically have and will continue to do—investors must adapt. There are plenty of "Plan B's' out there.
Robert, you of all people should understand the concept of sector rotation. Capital flows in, and capital flows out. Smart investing requires positioning yourself ahead of these shifts rather than anchoring your wealth to a sector experiencing downturn, headwinds, structural outflows etc.
Furthermore, your assertion that there are no high-yielding local alternatives to property, leaving only a "group of underperforming NZX 50 stocks," is not only decoupled from market reality but factually incorrect. Performance depends entirely on your entry point and benchmark.
Consider the capital appreciation and dividend yields of these specific NZX holdings over the last 18 to 24 months:
• Radius: Up 215% (6.5% yield)
• Channel Infra: Up 143% (4% yield)
• Freightways: Up 64% (4.5% yield)
• Contact Energy: Up 45% (6% yield)
• Infratil: Up 40% (1.6% yield)
• Chorus: Up 26% (6.5% yield)
• Oceania Healthcare: Up 26% (0% yield)
• Genesis Energy: Up 25% (7.3% yield)
• Mercury NZ: Up 20% (5% yield)
• Auckland Airport: Up 14% (2% yield)
• Mainfreight: Up 13% (4% yield)
• Meridian: Up 5% (5% yield)
Out of my entire domestic (NZ) portfolio, only Summerset, and EBOS are slightly underwater—and none have breached their risk-management stop-losses. This market environment is providing an exceptional opportunity to accumulate those 2 quality assets at bargain prices.
Even if we completely ignore the substantial capital gains listed above, the dividend yields alone comfortably outperform traditional bank deposits. Inflation has not been included. It is time to look past the property obsession and follow the money.
NOTE – This is NOT financial advice. For education purposes only.
Politicians being sneaky clever. If a 40 year old owns a modest house and paid off the mortgage and the house drops in value to $750000 that's AUD$620000. Can they buy a comparable house in Melbourne or Sydney? Okay, paid more wages, but question would be would the housing price differential dissuade migration. Or, maybe they'd relocate from, say Auckland to the Aussie boondocks.
Anonymous at 9.03am you seem have missed Robert MacCulloch's fundamental point.
He states " our genius political parties have destroyed the one way the vast majority of Kiwi's were able to accumulate wealth, namely the property market." That is a self evident truth .
And I doubt if that wealth destruction will be reversed for quite some time.
And a further self evident truth is that vastly fewer Kiwis have have accumulated wealth through the share market than through the property market , specifically their own homes.
And I doubt if their road to wealth will soon become the the share market.
Perhaps you could give our politicians a line or two on the laws of unintended economic consequences, something they seem entirely unaware of.
Robert, Then we have TOP wanting to de-activate housing further...
https://nominister.wordpress.com/2026/08/27/just-tell-anyone-you-know-and-watch-their-face/
I'm convinced the great unwashed home owners have no idea.
Keep cranking up the taxes, allow the pensioners to defer the taxes against their properties and then mop up any remaining equity via an inheritance tax. The next generation will own nothing, they will have no privacy and apparently they will be happy.
Hi Tom Logan,
Firstly this is NOT an attack on you. Just a very massive difference of opinion. Just like 9.03 and Robert MacCulloch, you have missed the underlying point of this discussion.
The question actually asked is "how low is too low?" (re housing). In my view, that question doesn't actually matter and is totally irrelevant.
What matters is adapting to the economic environment we live in today. That is the deeper underlying issue from my perspective. We no doubt will be having this discussion in 2 years from now, 5 years from now etc. We just dont learn....
You can blame anyone for anything including housing. And I agree, politicians deserve a roasting for some of the garbage they roll out. Robert has introduced a significant amount of misinformation to this thread, which I previously highlighted in my 2:13 pm post. (I even listed many examples of what anyone with a pc and internet and a little bit of curiosity could have invested in and done quite well in a relatively short period of time.)
You are also incorrect in stating that you "doubt that wealth destruction will be reversed for quite some time." I can make an opposing point for ‘what wealth destruction’? Global stock markets are sitting at all-time highs and gold is on a historic run. For context, a simple passive S&P500 index fund returned approximately 26% in 2023, 25% in 2024, 18% in 2025, and is up roughly 15% so far this year. Anyone can access these returns. you just need a computer.....and a plan b.
The opportunities for wealth creation right now are immense. Wealth is not being destroyed; it is being transferred. Investors with an open mind see this clearly. Only those who refuse to change and adapt are suffering.
You also noted that "further self evident truth that vastly fewer Kiwis have accumulated wealth through the share market than through the property market, specifically their own homes," and doubted that the share market would become their primary path forward.
Another self evident truth is ; the overly rigid, narrow-minded reliance on a single asset class with no alternative plan has been a very large part of the reason for stagnation, not moving forward and lost opportunity cost. Did anyone reap the 25%, 26%, 18% and 15% returns offered by the market over the last 4+ years? What about gold? If not, why not? It's risky being in the market, it's more risky NOT to be in the market!
Another truth is that things change. As i stated earlier - When macroeconomic environments, government policies, market dynamics, and interest rates shift—as they drastically have and will—investors must develop a Plan B.
You last sentence re 'unintended economic consequences, somehting they seem unaware of'....
I might have misunderstood you, but I was very aware of what was happening, the environment was screaming from the rooftops about what was happening to housing, the economy, inflation etc.
It does NOT matter what was intended or not, you should get yourself out of the way of the moving train.
The property party finished over 6 years ago, and some people are still standing around complaining about it wondering what is going on....
Thank you Mr Anonymous, no one here is doing other than debating the issue.
Professor MacCulloch is sometimes forthright in his articles ,as a man of his learning and position can have the confidence to be. But he is also minimalist on what he says.
After your comments the main plank of his argument remains intact. You don't seem to have rebutted that at all He talks of the " vast majority ".
After the years of Rogernomics and Ruthenasia, years of economic blitzkreig and scorched earth, economists overseas coined the phrase " the New Zealand effect."
to describe what grew from the carnage. And what was that ? Just more of the same . We remain now as we were before. A low wage, low skill economy, lacking in capital and r&d.
We have the same difficulty now as then to fund education ,healthcare, infrastructure.
And people in working class suburbs having had the "one way the vast majority of them were actually able to accumulate wealth" to quote Professor MacCulloch, are now going to flock to the ''Sharesies van" as it drives around South Auckland after the pay day loan sharks . I think not.
Professor MacCulloch was talking of the "vast majority" not the much lesser number of us that may invest elsewhere . I believe that point of his remains intact.
If you read again I suggested you might like to educate our politicians on the laws of unintended economic consequences, not yourself. No offence intended.
Once you have a home, you have a place to live. Why doesn’t Ryan want people to have their own homes, I wonder.
Tom - Great discussion.
I have addressed the issue of the ‘vast majority’, but only to point out that the 'vast majority' completely lack a Plan B.
Consequently, during times of high speculation, the vast majority inevitably end up on the wrong side of the equation—and unfortunately, it is usually those who can least afford the loss.
While I (sort of ) understand Robert’s perspective, my core argument stands: we have relied on a single asset class to build wealth for far too long. Even today, there is an entrenched, systemic belief that it is an inherent right to have a politically friendly environment that guarantees a single house purchase will set someone up for life. This narrow mindset remains unchanged, and the flawed thinking is deeply ingrained.
Remember that it is not the biggest or strongest that survives/thrives—otherwise, dinosaurs would still rule the planet. Thriving belongs to those who can adapt to the environment around them.
Ryan explicitly noted in the original article that while house prices are at their lowest in over a decade, vendors still cannot sell apartments or townhouses for love nor money. If property is truly the infallible wealth builder everyone claims it to be, why is the 'vast majority' not rushing back into the market?
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