NZ Property Market: Forget 7% Property Growth. Is 3% the New Normal? Ft. Nick Goodall | Episode 539
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Why do the hosts say the NZ property market might have finally reset?
We are back in your life. And today we are talking about how in 2021, income to house ratios exploded to 10 to one. Cotality says house affordability is officially back to normal. So has the property market finally reset itself? Welcome, Nick Goodall, Head of Research at Cotality. This is an interesting one, saying housing market's back to normal. It's affordable. Everyone gets a house. Yeah, good a chance. Thanks for
having me. No, no problem.
You also claim yourself as Northland Pride as well. You mentioned that Brad Olsen, that you saw that episode. So you're claiming yourself as we're getting a little bit of a theme going.
There
is, there is. I mean, it's just good talent from the North,
you know? Yeah,
yeah. Yeah. I don't know if you guys are just like getting in on the shield fever. Obviously,
if I have a shield and God,
which Northlanders
can we get on
and
get a part of that? It is funny. Like if you go back through the last, like, I don't know, four or five, six, whatever, a hundred episodes, a thousand episodes, how many were we up to? Yeah,
but you wouldn't even know. I wouldn't even know. I wouldn't even watch this. You
know, like the instances of us talking about Northland, you know it's probably very very very low all of a sudden they get the shield and for some reason it's
like
it's like coincidentally we're like north and north and northland yeah
so um yeah we've got you nick we've got brad so we've tapped out the northland talent so i guess we're all done if there's somebody from northland you'd like us to give them any Yeah, let us know. It is interesting, though, I guess, Nick, when we think about where the property market is 10 to 1, what horrendous times that was. Is horrendous the right word, do you think, Mike?
How has mortgage affordability improved and what does that mean for demand?
Yeah, I think horrendous, right? I think the horrendous bit of it is actually not how much or how over-exaggerated the value was or the prices in the market. It's just that people didn't have any choice but to buy. If you remember... you were an idiot if you weren't buying houses. Like you needed to buy a house and you needed to buy it today. Otherwise, your mom wasn't proud of you. Your dad wasn't proud of you. Your family decided, you know what I mean? Like, it's just like, unfortunately, that was the fever. I
hate to break it to you, Mike, whether your parents are proud of you does not have anything to do with houses, but let's move on. So I think it is a good point, Nick. I mean, you look at it in Obviously, house prices have fallen. Some people have lost hundreds of thousands of dollars, negative equity, all of those sort of things. But when you dig into the data, it starts to tell a little bit of a different story. So when you look at, I guess, the shape of the property market in New Zealand at the moment, what are you seeing? Yeah,
I think that's the key thing we've been looking for is when that affordability starts to improve. That house price to income ratio from the tens, as you say, has dropped down to below seven now. Initially, we saw that drop because as soon as prices dropped, that's when the house value to income ratio dropped away. What we watched more for in that time, though, was what was happening with the mortgage affordability, because for most people, you use a mortgage to get into the market. And that number didn't actually change too much as prices fell because interest rates started to increase. And so that actually fought against it. So it wasn't until the last, say, year or so where affordability really improved because we've now seen prices stay flat, incomes continue to grow, and interest rates did obviously fall over the last few years until more recently.
So that's what's really changed now is that mortgage affordability. The proportion of income required to service a mortgage is now back to those long-term averages. And that means there's going to be an underlying level of demand that'll be going forward for the next wee while.
So does that mean because I mean, it's very interesting when you talk to people over the last five years, some people go like the property markets fundamentally change, right?
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Chapters
8 chapters
1
Why do the hosts say the NZ property market might have finally reset?
0:00–1:36
2
How has mortgage affordability improved and what does that mean for demand?
1:36–3:36
3
Which regions are outperforming the national trend and why?
3:36–4:58
4
What are the realistic long‑term growth rates for investors versus owner‑occupiers?
4:58–7:26
5
Why are townhouses becoming the new focus for first‑time buyers?
7:26–10:19
6
What economic indicators will drive the next wave of house‑price growth?
10:19–11:45
7
What will the NZ property market look like a year from now?
11:45–13:33
8
How do the hosts wrap up the discussion and what should listeners do next?
13:33–41:22
Speakers
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