The Unconditional Blog

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TV3 interview on property price statistics

Posted on: July 7th, 2009 | Filed in Buying / Selling a home

Following the analysis of property price statistics and the revised forecast from Bernard Hickey on what he now sees as a 15% peak-to-fall in property price as opposed to the original 30% peak-to-fall, this interview this morning on TV3’s ASB Business with Bernard Hickey of interest.co.nz. provided me with the opportunity to bring some greater clarity to the reporting of property pricing.

The interview might have turned out somewhat differently if I had not been able to quickly re-claim my interview chair from a rather stunned looking gentleman from Telstra who was mistakenly placed in my seat at the start of the interview and greets Michael Wilson warmly as “Alistair Helm”!

Article Discussion

  1. Alistair, let me be the first to say….

    ROFL

    Funniest start to an interview I’ve seen in ages :)

  2. Greig Metcalfe says:

    Hickey was always an idiot in making the 30% prediction. The harm he did to the economy was huge and a simple apology does not cut it. Any thinking observer of the NZ investment economy knew when he made the prediction that NZ always go back to property.
    He showed his youth with that comment and his lack of study of past economic cycles.
    I predict his now reshaped 15% prediction will also be wrong.

  3. Wow, the bulls are being really vocal recently.
    IMO it’s way too early to crow.

    I find it amazing that Bernard is being criticised for making a prediction. He was one of only very few who countered the “ever up” bullish crowd who ignore the fundamental prolem of the idea of house prices always going up.
    They don’t.

    Bernard did no harm to the economy. He made a prediction.

    The REAL harm to the NZ economy is being done by all of those who are malinvesting. Investing in a non-productive bubble. Building a house is productive. Buying and selling them is not. You should be investing in something production.
    Shame on you for causing so much trouble for this country.

  4. Appreciate those perspectives.

    In my judgement, at the time Bernard was right to call the likelihood of a significant adjustment in prices. Having lived through the lat 80’s property crash in the UK I can remember the same views that property prices never fall – they did!

    As to 30% – I never believed (or hoped) that that would materialise. It could have been 15% to 20% fall from the $350k to the $300k range. As it turns out it may not be this much.

    As to judgement of buying and selling houses being non-productive – I think this is a little narrow view – there are multiple sectors of the economy that are not productive.

    The fact is that property transactions will always occur – there is a consumer need to be assisted in the process and people are prepared to pay for it – just as I could put the kettle on and make a coffee for 40c – instead I walk to the cafe and buy a $3.50 cafe – how productive is the cafe!

    Let’s not blame the real estate industry – nobody has ever bought a house because a real estate agent forced them to – the industry exists because it is deemed to add value – if that was not the case there would be no industry. In the past it has had new challengers, in the future there will be more – the industry does not create bubbles – people create bubbles because they see financial reward.

  5. Andrew Burns says:

    I think Steve is refering to property traders playing the short term capital gain game

  6. Alistair,
    I am not, and did not, blame the real estate industry.
    Apart from the obvios bias, that any sales person would have, the real estate industry is as you say, a useful mechanism buying and selling property.

    No, instead I direct my disapproval at malinvestment.
    An example is the distant suburbs in the states, which rely on cars to connect the inhabitants to their distant work places. Only a sustainable organisation when energy remains available at a reasonable price. Unsustainable if you think oil is finite.

    Likewise, one can try to separate investments into productive and non-productive.
    IMO buying and selling shares or commodities is non-productive. Likewise people saving for their retirement by buying existing property I contend is non-productive. It sucks money into what should be just places for people to live, and away from productive, and in our case, export sectors , which could bring much needed money into the country.
    It also raises prices making it more difficult for first time buyers, and forcing them to take out larger loans, keeping them in debt, and working to pay off that debt and interest for longer. That is a debt-slave society, which forces both parents to work, increasing the chances of children being brought up less well.

    I think each person should ask whether what they invest in actually benefits anyone but themselves. Whether they only gain at the expense of someone else. I think people should seek investments that benefit more than just themselves.

    The reason NZ is doing so porely is because we are forced to borrow money from outside the country, trapped in the fractional reserve debt based money system. Borrow money from abroad to pump up a house price bubble just puts more stress on our economy, as all that debt has to be paid off by what we earn exporting.
    It’s time to stop and think about this.

  7. Steve

    I cannot disagree with anything you say – I wish we could change this mindset and convince people to seek retirement savings in patient capital which can be invested in productive capability. However we are sadly a selfish race of people (that is consumers to which I refer rather than any ethnic race) – we seek self gratification and financial reward.

    I fear there is no easy or quick fix – although governments have such a key role to influence and impact the investment motivations and demotivations, through appropriate incentives and penalties (taxes).

  8. Alistair,
    I have been mentioning this everywhere I can.
    I think you may find it interesting.

    White Paper on All the Options for Managing a Systemic Bank Crisis by Bernard Lietaer
    Center for Sustainable Resources,
    University of California at Berkeley
    http://www.lietaer.com/images/White_Paper_on_Systemic_Banking_Crises_final.pdf

    This is a subject I am very interested in. I have a section devoted to just Bernard related things: http://neuralnetwriter.cylo42.com/forum/50

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