Bucking the global trend

Q: People do not want to hear that residential property could be a loser, or that borrowing for investment increases the risk, and especially not that they could possibly be forced to sell while prices are down.

People like to be told what they want to hear. They want to hear that property will always be a winner.

In fact they demand it, and there are many who make a living out of providing this essential service.

Why can't you be like the others and tell them the sweet little lies that they so want to hear?

If you persist in being logical you will become very unpopular.

Keep up the good work. Nice to see someone in print who knows that New Zealand's property history over the past 30 years has been very unusual in having not had a property collapse that wiped out many people.

Thanks! And yes, we have been lucky by world standards.

The Economist reports that British home prices dropped in each of the four years to 1993. House price booms in the late 1980s in Japan and Sweden were also followed by a steep plunge in prices.

In Germany, real prices have dropped by almost 30 per cent since 1992.

In Tokyo, real house prices rose by an impressive 12 per cent a year in the 1980s. They have now fallen for 11 consecutive years to less than half their 1990 peak. Yikes!

I'm not saying the same will happen in New Zealand. Circumstances in each country are quite different.

Still, real house prices around the world have risen less than 1 per cent since 1980, says the Economist. When you compare that with our 2 per cent, you wonder whether we can keep outpacing other countries.

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