COMMENT: A couple of months ago, during an animated discussion, I got labelled with a term that I had never previously heard. According to my accuser in this particular debate, I was a “Covid denier”.
The term still makes me smile, not just because it was an innovative attempt to discredit my views, but also because, in the scheme of things, I’m certainly not an extremist when it comes to my views on Covid 19.
In a nutshell, I think the Government’s actions during the first lockdown in 2020 were responsible and wise (because the threat to life posed by Covid was an unknown back then); I’m not anti-vax (I’ve had my three jabs) – although I do think the Government lost sight of personal rights and freedoms and ended up dividing our society in a way not seen since the early 80s; I think the mandates became less and less justified as time went on and better data became available and made a mockery of many of the silly mitigation measures; and I think the entire fiasco has become less about health and more about politics in that the Government has tried to use Covid to recreate the kind of poll support that it received in 2020.
While not everyone will agree with these points, most reasonable people now accept the common sense of them and have developed a healthy scepticism of “unjustified authority”, but there will always be a section of society which will defer to authority regardless of how ridiculous the demands or claims being made. Indeed, I honestly believe that, if the Government mandated that we were all to wear striped pyjamas to fight Covid – some people would be out, the following day, sporting their freshly pressed striped PJs and dobbing in anyone who wasn’t doing likewise!
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This behaviour isn’t confined to Covid, of course. We see it in deference to all manner of silly legislation – and we certainly see it at play in the property market - not just in respect of the rules we follow but also the views we believe and the way we respond to what we’re being told.
Ashley Church: “Changes in the property market are proving to be significantly less scary than we’ve been led to believe.” Photo / Ted Baghurst
We’re seeing it right now in respect of the much-touted property market “crash”, which, according to some, is almost upon us. Indeed, evidence of it seems to have been confirmed just a few days ago in a OneRoof report, which showed that, in the three months to the end of April, Auckland suffered its biggest quarterly decline in house prices since the GFC.
And how big was this momentous, market-defining drop? 20%? 10%?
Umm, 2%.
You read that right. Average property values in Auckland have fallen just 2 percent in three months – and average property values in every other region have actually increased over the same period! This includes Northland where average house prices are up by 5.8% for the quarter and Canterbury and Southland where they’re up by 2.9%.
So what does this mean? Are house prices about to take off again? Well, no – probably not. In fact, in some regions, the increases may have been inflated by a smaller number of sales or a large significant transaction – but the point is that the market isn’t “crashing” despite what you might be seeing or hearing.
Even the observation that the 2% quarter drop in Auckland is the biggest quarterly drop in our Queen City since the GFC 14 years ago says more about the fact that the impact of the GFC was also dramatically overblown by many commentators and that the Auckland housing market has been remarkably benign for the best part of 40 years.
So, despite the colourful language in the OneRoof report – the Auckland market isn’t “reeling” from this drop, there isn’t widespread “pain” across the city, and very few vendors are “suffering” – particularly given that the 2% quarter drop followed average house price growth of around 30% between January 2020 and December 2022.
It’s wise to be cautious right now – particularly given the upward trajectory of mortgage interest rates in response to inflationary pressures elsewhere in the economy – but treat dramatic superlatives with a healthy degree of scepticism and look at the numbers, rather than the headlines.
As was the case with the initial fears around Covid, the reality of changes in the property market are proving to be significantly less scary than we’ve been led to believe.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
