How much do you really want the value of your property to fall?
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 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?
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