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Hard and Fast

NZ Housing Market: a copy of the UK?

By Antonios Karantze, in , posted: 18-Mar-2007 18:30

I don't consider myself a pessimist, or a cynic. Many people around me think I must be, because I have a habit of VERY rapidly deconstructing situations or ideas to their elements, and seeking the weak link.

15 years of commercial business life will do that to anyone; remember, in a capitalist world you are working for the good of the shareholder, which doesn't always marry with best technology (Costs more) or social benefits (cheap broadband! no profit but who cares anyway?).

I read in the Daily Telegraph (UK) online site that the House market is gridlocked:

and that supply is at it's lowest level for a very long time, leading to erratic and plain stupid behaviour by buyers. But it's also a vicious cycle; people aren't putting their house on the market for fear of not being able to buy the house they want. So they either buy a new one outright - further squeezing supply - and then put theirs on, or they don't buy altogether. Some folk I know in Kelburn did the former, and only put theirs up for sale once their new house was secure.

In NZ going the same way? We copy the UK in a great many areas, and I think housing is similar - supply is tight, prices just stupid, and erratic behaviour abounds. Ending in tears is easy to say, but look at other indicators:

- Personal bankruptcies are growing in NZ - current rate is 1 in 1258. Mind you in the states is 1 in 169.
- The Leaders and Tommys guides are the thinest I recall seeing them in the last 18 months (!)
- Only very poor or very pricey homes are available; the mid tier houses in the $400-700k bracket just aren't appearing

I find it funny when I read that house prices or values won't go down, or will gently deflate. So here's something to consider:

In 1992 the housing bubble in the UK popped nicely, and many people were forced into foreclosure or other horrible positions. The contagion spread to NZ, and I still clearly remember getting the latest valuations from Wellington City Council on my folks property; it had halved since the previous year (and of course, the rates had gone up for good measure).

There were other factors at work - a change in the valuation system for one - but it clearly demonstrated what an artificial nonsense house values really are.

The only truth - since civilised man emerged in Greece 5000 years ago, one of the true kings is CASH. Settle your debts. Put away for the future. Have a plan to be debt free that involves coming out cash positive! and remember that those writing the doom and wonder stories are just people, prone to following groupthink as much as the next person....

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antoniosk's profile

Antonios Karantze
New Zealand

I'm a born and bred Wellingtonian, and have chosen IT and Telecommunications as my industry, as a Commercial Manager.

Credits include but are not limited to:
- The O2 Xda smartphone range, and O2's range of 3G Mobile Internet services
- Numerous TelstraClear Mobile and IP voice products

In my journey through the industry I have worked at
- Bellsouth NZ
- Telecom NZ
- ICO Global
- T-Mobile International (formerly One2One Communications)
- O2 Plc
- TelstraClear
- Vodafone NZ

I'm a fan of technology, and what it can do for people and business... and I enjoy bringing new things to market and seeing them grow. Enjoy the blog, take the time to think about what I write - it's not technology heavy, and is my reflection on life and the people around me.