ANALYSIS: It’s ingrained in the Kiwi psyche, heard at almost every summer barbecue, Christmas Party, and family gathering: Houses double in value every 10 years in New Zealand.

But do they? Looking at the last 22 years of house price data, we can see that house prices have doubled every 10 years, but only 45% of the time.

That doesn’t mean that house prices in the remaining 55% haven’t gone up; only that they haven’t met that legendary 10-year doubling threshold.

Sometimes, house prices have doubled in less than 10 years; on other occasions, they’ve taken much longer.

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The quickest doubling happened between 2002 and 2007. It took just five years and one month for house values to go up 100%. The slowest doubling took almost 14 years. That was between 2005 and 2013, the latter part of which was dominated by the Global Financial Crisis (GFC).

Before you start opining that property is a sure bet, you need to know that these numbers only look at how long it took for house prices to double the first time. It doesn’t look at what happened after they doubled. Home values can go up, down, or stay the same.

House prices in New Zealand have risen sharply over the last two decades but growth hasn't been consistent or universal. Artwork / Beth Walsh

Opes Partners economist Ed McKnight: "While house prices have gone up by 6.7% in the average year, that number might be closer to 5% in the future." Photo / Fiona Goodall

For instance, during the post-Covid property boom, values increased 42% in less than two years. That pace of growth wasn’t sustainable and values fell 17.8% immediately after. In some areas like Lower Hutt, property values fell just over 30%.

The graph below shows there was a big jump in house values for those who bought in February 2002. Those property owners doubled their money in just five years. However, those who bought one month later had to wait 10.5 years for their home to double in value.

Nothing magical happened between February 28 and March 1, 2002, but in 2007 the property market slowed. Properties bought in February 2002 just snuck over that x2 threshold, while those who bought in March 2002 just missed the mark.

The same phenomenon can be seen in 2015. Homes purchased in May of that years have doubled in value (but they have also fallen in price). But homes bought June 2015 have yet to double in value. Today, they sit just 68% above their purchase price.

If I were to run these numbers again in a few years, you’ll get another jump in the graph like you had in 2002.

Which areas have been most lucky?

It’s also important to remember that homeowners in some areas have been luckier than others. Property owners in Otago and Southland have done well. Mackenzie District’s house prices doubled 74% of the time over any given 10-year period. Meanwhile, parts of Canterbury, Northland, and Waikato haven’t been as lucky. Hamilton’s house prices doubled within a decade only 21% of the time.

Will house prices keep doubling in the future?

House prices have gone up a lot since 1992, but that doesn’t mean that they will continue to rise at rapid pace. House prices are already high compared to incomes; there is only so much that people can borrow and afford to pay back.

The Reserve Bank’s debt-to-income restrictions, introduced last year, are still fresh and have yet to bite. When they do they will take steam out of the property market and mean that prices don’t rise as fast in the boom times.

Then, there is the Government’s housing supply policies. While, not yet introduced, National plans to force councils to open up more land for building. That extra supply will likely slow property price growth.

It’s also worth noting that good quality house price data, from the Real Estate Institute of New Zealand, only goes back to 1992, so these numbers are a snapshot of a time in which property prices have happened to do well. While house prices have gone up by 6.7% in the average year, that number might be closer to 5% in the future.

- Ed McKnight is the economist at property investment company Opes Partners