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Ed McKnight: Are house prices really falling flat? · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks be follow
• 0:12
  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
• 0:18
  Speaker 2: Ed McKnight from Opie's partner is our personal finance expert,
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  Speaker 2: is here with us this morning, Kyoto, good morning.
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  Speaker 3: Nice to talk to you.
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  Speaker 1: Jack.
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  Speaker 2: Nice to be chatting with you. You've got some booming
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  Speaker 2: parts of our property market this morning. And I know
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  Speaker 2: that's going to sound like a crazy thing for a
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  Speaker 2: lot of people who think that the entire property market
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  Speaker 2: is still down in the doldrooms. But that isn't necessarily
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  Speaker 2: the case. You reckon the flat market concept is a
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  Speaker 2: bit of a myth, well only.
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  Speaker 3: In some parts, I would say, right, because if you
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  Speaker 3: look at the national numbers, house prices might be up
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  Speaker 3: like zero point three percent over the last three months.
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  Speaker 3: It's like it's like nothing right.
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  Speaker 1: Yeah.
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  Speaker 3: But one of the things that we've just got to
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  Speaker 3: make sure when we're thinking about the property market is
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  Speaker 3: that we're not looking at Auckland and Wellington and thinking
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  Speaker 3: that that's what's happening across all of New Zealand, because
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  Speaker 3: what can happen is places like Auckland are doing it
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  Speaker 3: pretty tough right now in terms of house prices lower.
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  Speaker 3: Hothouse price is still falling their same with places like
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  Speaker 3: live In. But while those those areas are dragging down
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  Speaker 3: the national average, there are a couple of places that
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  Speaker 3: are really bucking the trend. Now you wouldn't believe it,
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  Speaker 3: but coming in at number one on my list of
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  Speaker 3: booming places as parts of the West Coast, so specifically
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  Speaker 3: Grayland and Westland. I mean, house prices in Westland are
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  Speaker 3: up thirty two percent from the bottom of the market.
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  Speaker 3: They are now twenty one percent above where they were
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  Speaker 3: back in the frothy times during COVID when interest rates
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  Speaker 3: were really really low. So think about that peak bang
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  Speaker 3: on in another twenty percent. That's what's happening down in
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  Speaker 3: the West Coast. Lots of mining going on there at
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  Speaker 3: the moment, which is why the property market's doing quite well.
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  Speaker 3: Now keep in mind it's a tiny we town, right,
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  Speaker 3: It's a small area, so there's not really going to
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  Speaker 3: be up the national average too much. But I just
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  Speaker 3: always think, look, I'm sitting here in Auckland recording this
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  Speaker 3: talking to you. I know you're in Auckland as well.
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  Speaker 3: We've always just got to remember that Auckland's not New Zealand, right,
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  Speaker 3: and there's a whole big property market out there are
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  Speaker 3: lots of little different ones all around the country.
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  Speaker 2: So that's it. I mean, the West Coast has always
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  Speaker 2: been if you look at the kind of West Coast economy,
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  Speaker 2: it has always been kind of boom and bust to
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  Speaker 2: a certain degree. So I suppose that if indeed it
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  Speaker 2: is going through a bit of a boom period at
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  Speaker 2: the moment, or set to go through a bit of
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  Speaker 2: a boom period. They've got lots of dairy farms there
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  Speaker 2: as well that can contribute to that. That might explain
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  Speaker 2: some of it. But what about something like christ Church Queenstown,
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  Speaker 2: because they're both back above their COVID peaks as well.
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  Speaker 3: Ah, well, that's right, christ Church has just stepped back
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  Speaker 3: under it again. But the property market there bottomed out
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  Speaker 3: about May twenty twenty three. Since then, house prices are
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  Speaker 3: up eleven percent. If your property followed the market absolutely perfectly.
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  Speaker 3: And look, if you log onto one roof homes not
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  Speaker 3: COVID and said, you'll see that your property doesn't follow
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  Speaker 3: the market exactly. But let's say it did. Yeah, your
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  Speaker 3: house would basically be back where it was at that
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  Speaker 3: COVID nineteen peak. Queenstown never really went through that much
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  Speaker 3: of a downturn when interest rates started rising, mainly because
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  Speaker 3: during the COVID boom, house prices didn't increase there in
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  Speaker 3: Queenstown at the same rate as the likes of christ Church,
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  Speaker 3: and so it didn't have because it didn't go up
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  Speaker 3: as much, it didn't have as far down to come.
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  Speaker 3: And so now house prices in Queenstown are thirteen percent
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  Speaker 3: above the peak of what they were in the market. Now,
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  Speaker 3: that's not going to make Aucklands feel too well or
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  Speaker 3: the people of Hawk's Bay. House prices there are still
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  Speaker 3: doing it really tough. But it's interesting to just see that,
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  Speaker 3: Oh New Zealand's not one just homogenized property market. There
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  Speaker 3: are lots of different areas doing lots of different and
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  Speaker 3: interesting things.
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  Speaker 2: Yeah yeah, and each region has its own distinct qualities
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  Speaker 2: that can make it different. So far North, for example,
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  Speaker 2: there's also doing all right. It's the one North Island exception.
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  Speaker 3: Well, that's the part that's really surprised me, because if
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  Speaker 3: we think about how property prices are going at the moment,
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  Speaker 3: there is a there is a real divide along the
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  Speaker 3: Cook strength. The South Island's going Okay, in many parts
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  Speaker 3: the North Islands not but way up, way up north,
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  Speaker 3: in the far North. House prices, yes, you said, up
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  Speaker 3: nine percent off the bottom, still below their COVID nineteen peak,
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  Speaker 3: about five percent underneath that. But if you live it
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  Speaker 3: up in Kai Tai and maybe you don't feel too
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  Speaker 3: bad about property prices like some people might if you were,
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  Speaker 3: say in Parmerston, North right now.
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  Speaker 2: Yeah, right, okay, yeah, talk us through the areas where
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  Speaker 2: it's still falling.
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  Speaker 3: Well, if the parts that are really doing it tough
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  Speaker 3: are lower and upper hut, those places are down thirty
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  Speaker 3: and twenty six percent below their peaks. Imagine that if
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  Speaker 3: you owned a house, and we'll use just real simple numbers,
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  Speaker 3: but a million bucks a drop of thirty percent in
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  Speaker 3: lower half you're down at seven hundred k that three
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  Speaker 3: hundred thousand dollars. Hits really really going to feel it.
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  Speaker 3: And as I said before, Hawk's Bay, especially in wide Over,
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  Speaker 3: the small little town where we've got Rocket Labs being based,
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  Speaker 3: house price is there down twenty seven and a half
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  Speaker 3: percent from the peak, and just in the last three
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  Speaker 3: months down just a touch over seven percent.
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  Speaker 2: Yeah right, okay, So what's your overall takeaway?
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  Speaker 3: Then well, I just I mean, it wouldn't be to
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  Speaker 3: be to pack up sticks and move to the West
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  Speaker 3: Coast because that's where property prices are booming right now.
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  Speaker 3: Because the fact that they're up thirty percent over the
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  Speaker 3: last couple of years isn't necessarily an indication that it's
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  Speaker 3: going to continue on like that forever, is it. You know,
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  Speaker 3: there is a chance that you might have missed the
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  Speaker 3: West Coast boom. But the main thing I always say
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  Speaker 3: to people is the same what I talk about in
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  Speaker 3: terms of the sheer market, which is if the market
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  Speaker 3: is flat, there might still be opportunities out there for you.
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  Speaker 3: You've just got to be watchful. And if you are
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  Speaker 3: in one of those areas where house prices haven't recovered yet,
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  Speaker 3: you can look at other parts of the country and think, Okay,
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  Speaker 3: maybe I'll get a recovery at some point. It's basically
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  Speaker 3: saying don't make any rash or emotional decisions.
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  Speaker 2: Yes, that's always good advice. Thank you so much, Ed,
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  Speaker 2: Ed mcnight. Thanks's partners.
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