Why do people think the QV “valuation” is in any way relevant, accurate, or realistic?

I was just snooping on Homes.co.nz in my local area as a few house in my street had sold quite quickly recently. The estimate on our own home has risen quite sharply in the last 6 months. I know its only an estimate and doesn't mean much but I have found them to be pretty accurate going by recent sales in the area. 

Senecio:

 

I was just snooping on Homes.co.nz in my local area as a few house in my street had sold quite quickly recently. The estimate on our own home has risen quite sharply in the last 6 months. I know its only an estimate and doesn't mean much but I have found them to be pretty accurate going by recent sales in the area. 

 

It's seeming pretty accurate if I'm honest. 
Of all of the houses around my area, they all went close to the estimate.

I don't mean to sound dumb (again) but why would unemployment need to rise if house prices are going to fall to a "sane" level (ie, $250k-$450k range)? I seem to recall house prices being in this price range during the 1990s and 2000s...but I don't recall high unemployment around those times either? In fact I remember jobs aplenty in the mid-to-late 1990s, when I first entered the workforce.
Sorry, I just don't get the correlation.

That's how inflation works. Prices only fall (or rise) if there is a reason to. Would you accept a salary that was based on a 1990 level? Can you buy an apple for the same price you paid in 1990?

No one in their right mind will sell their house for half what they paid for it unless they are forced to. The main reason for being forced to sell a house is you can't pay the mortgage.

Unemployment was actually very high in the early 90s, and interest rates historically were much higher than they are now. Low interest rates inflate asset prices which is probably the main reason why the sharemarket is still holding up despite all the economic doom and gloom.

Handle9:

 

That's how inflation works. Prices only fall (or rise) if there is a reason to. Would you accept a salary that was based on a 1990 level? Can you buy an apple for the same price you paid in 1990?

 

No one in their right mind will sell their house for half what they paid for it unless they are forced to. The main reason for being forced to sell a house is you can't pay the mortgage.

 

 

 

For sure, I see what you're saying - inflation changes everything. But why have prices only skyrocketed to ridiculous levels mostly in Auckland? Houses in Southland and the West Coast are much much cheaper.

It used to be (pre the 2010s) that the prices were fairly similar across the nation. Auckland houses - while slightly more expensive - weren't exactly as high as they are now.

Compare a house in Dunedin to a similar house in Auckland in, say, 2010 (a recent-ish timeframe). There wasn't a hell of a lot of difference in pricing back then. Why should Auckland's be three times more expensive now? Purely population growth?

quickymart:

 

Handle9:

 

That's how inflation works. Prices only fall (or rise) if there is a reason to. Would you accept a salary that was based on a 1990 level? Can you buy an apple for the same price you paid in 1990?

 

No one in their right mind will sell their house for half what they paid for it unless they are forced to. The main reason for being forced to sell a house is you can't pay the mortgage.

 

 

For sure, I see what you're saying - inflation changes everything. But why have prices only skyrocketed to ridiculous levels mostly in Auckland? Houses in Southland and the West Coast are much much cheaper.

 

It used to be (pre the 2010s) that the prices were fairly similar across the nation. Auckland houses - while slightly more expensive - weren't exactly as high as they are now.

 

Compare a house in Dunedin to a similar house in Auckland in, say, 2010 (a recent-ish timeframe). There wasn't a hell of a lot of difference in pricing back then. Why should Auckland's be three times more expensive now? Purely population growth?

 

Is there any evidence for what you are saying or is it your opinion?

Auckland house prices have always been significantly more expensive than outside of Auckland. Sure they have grown faster than outside of Auckland, that's how finite supply and growing demand works.

I didn't know I needed to provide evidence, didn't realise I was on trial.

Anyway, here's two random addresses I found, in Auckland and Dunedin. The difference is around $50k-$100k between the two properties initially, until about 2014 when the Auckland one shoots up by a large degree.

https://homes.co.nz/address/auckland/glenfield/2-30-mayfield-road/rkzG

https://homes.co.nz/address/dunedin/dunedin-central/277-high-street/WqpD7

I don't know if house prices have increased the way you suggested. I don't take any assertions of statistics at face value without a source, they are far too easily abused.

Individual houses don't tell you a great deal either. You need aggregated statistics to get meaningful data. Something like the graph below is far more use. 

https://www.odt.co.nz/star-news/star-christchurch/signs-growth-last-christchurch-property-market

You can see different markets behaving differently at different times. If you look at it over 10 years Dunedin prices have roughly doubled, as have Auckland prices.

Of course the price is made up of two parts - the land and the house. The house price generally increases, or depreciates, in line with the replacement cost, the land price is more volatile.

The overall value is the combination of the two.

no way. you could buy a house in dunedin for $6,000 in 1997, though the average was around 50-70k iirc

in 2004 the average house would cost 100-200k

Batman:

no way. you could buy a house in dunedin for $6,000 in 1997, though the average was around 50-70k iirc

just trying to recall house prices in that time in Dunedin. not sure what house prices were in AKL at that time. i'm guessing roughly double those figures