House Inflation – Sage Advice

House inflation; something to think about when it comes to one our most expensive assets.

Since 1963 under 12 three year terms of National governments average house prices have risen by 9.2% per annum. Under Labour’s 6 terms they have risen 16.8% per annum on average. If we confine ourselves only to the 1990+ low inflation period the average per annum rise under National has been 6.6% versus 12.6% under Labour.

Personally I would not blindly extrapolate these numbers to a forecast that if Labour stay nine years again this time that come 2026 average house prices will be some 113% higher than they are now. Instead, let’s just use this simple piece of analysis to remind ourselves that thoughts of house prices sitting flat for many, many years and affordability getting really, really better for young people are probably well misplaced. Long-term hold is the trick in the NZ property market (residential and rural particularly). Remember “Long-term hold”.

Sage advice from Tony Alexander, Economist with the BNZInflation and Homes