Since 2010, New Zealand’s ratio of house prices to incomes has soared 33 per cent. Other countries anywhere near that growth rate are in Europe. The countries we usually compare ourselves with – Australia, the UK, the US and Canada – have all seen considerably slower increases in that ratio.
Regardless of supply and demand, immigration, the pace of construction and so on, house prices can’t keep rising if people can’t afford to buy. That’s why I’m making an exception to one of my golden rules of investing: don’t try to time markets.
If you were buying shares or bonds, you could dripfeed into the market, but unfortunately with a house purchase you must buy the whole thing on one day. Because of that, and this country’s top spot in price-to-income comparisons, I wouldn’t buy a house right now – or certainly not in Auckland or elsewhere where prices are rising fast.
New Zealand has the third highest growth in prices since 2010, after Turkey and Sweden. House prices are rising much faster than rent. Paying rent isn’t a stupid thing to do.
Mary Holm, NZ Herald