We’re not experts at analyzing data and reporting the news on the property market – we’ll leave that to the experts, and the Herald.

The property market has come down for a ‘soft landing’– and apart from nuclear war, it’s unlikely we’ll be seeing a crash anytime soon. It’s time to stop worrying about a crash – there are more important things to think about. I mean, wouldn’t you rather talk about important things like your children, jobs, relationships?

At lunch in Ponsonby last year, eaves dropping on few conversations – almost everyone was talking about their house, or the next house they wanted, or the ‘crazy hot’ property market. The fidget spinner fad is over (I hope!) and so is property – perhaps.

The facts:

Auckland house sales and average prices are down.

Unemployment is super low.

Interest rates incredibly low and the new norm is likely between 4-6% going forward.

Inflation does not exist.

It’s winter, and an election is coming.

Short term considerations:

  • Election year –usually a catalyst for housing market change, but only when an external event occurs at the same time. North Korea?
  • Inflation is very dormant: Given that the OCR moves in response to this, expect interest rates and the dollar to stay static for a time.
  • End of 10 yr cycle: You may not subscribe to this, but many do, and that’s why it’s relevant. What happened in 1967, ’77, ’87, ’97, 2007? Anyone…anyone…Bueller?

Longer term speculations?

  • Inflation is dead. Deflation should be the concern: Monetary easing, falling oil prices, emerging technologies all point not to change – but to transformation ahead.
  • As deflation intensifies, watch out for asset hyperinflation – you think property prices are crazy now – we have no idea.
  • Banking transformation. As interest rates converge to zero in the long run, the banking sector will go through a creative destruction process – this will be driven by consumers (aka borrowers).
  • Tech transformation: Personal incomes in many industries will decrease considerably, but so also will costs – that’s what happens with deflation.

Putting it all together…

The next 5-7 years are a holding pattern I suspect – no alarms and no surprises. You’ll see the start of autonomous vehicles, solar panels in roof tiles, ‘as a service’ technologies explode and by far the coolest thing – the fractionalisation of home ownership. After that it’s anyone’s guess as to what it will look like but one thing’s for sure – none of us are ready for it! So don’t worry – start to love the bomb and the uncertain times we live in – it’s entertainment at least!