The future of house prices – how high can they go?
New analysis from New Zealand Media and Entertainment’s OneRoof shows the New Zealand property market will be in for a wild ride if the last 20 years are anything to go by. OneRoof has taken the change in the median sale price for every territorial authority in New Zealand between 1999 and 2019 and applied the same percentage increase to current house prices over the next 20 years.
OneRoof undertook the exercise to see what the results would like look like if the market cycle repeated itself over the next 2 decades.
The results are eyewatering – even by today’s house price standards. The median price of a house in Auckland could rise to almost $3 million by 2040 - more than three times what it is now. The most expensive to buy will still likely be Queenstown - buyers there may have to stump up $4.79 million for a home, as opposed to about $1 million now.
OneRoof says the figures suggest Wairoa in Hawke's Bay will be the cheapest place to buy property in 20 years' time, with house prices there expected to rise to a relatively affordable $353,309.
Home owners in Carterton can imagine a median price of $1.9 million, Kapiti Coast $2.3 million and Invercargill $1.2 million.
OneRoof editor Owen Vaughan says: "We thought we would go out on a limb and look at what house prices might look like in 20 years' time. The last 20 years have seen major changes to the housing market, with prices rising between 200 and 500 percent for the majority of the country.”
Some counsel caution when looking at historical data. Mike Jones, senior economist with the ASB, told OneRoof: “It’s hard to be definitive about what the next 20 years will bring given we don’t know the shape of some pretty important factors, such as population growth and the political backdrop. We do think the housing market is going to have a tough time matching its past performance."
OneRoof commentator and former Property Institute of New Zealand CEO Ashley Church says the secret to understanding the future of the property market is to understand its past. “Over the past 40 years we’ve seen house prices, in most of New Zealand, increase by between 70 percent and 100 percent or more, every decade, there’s no reason to believe that pattern will change."
See the full OneRoof story here.