The Dim-Post

December 14, 2008

Who to believe?

Filed under: finance — danylmc @ 10:03 am

I believe house prices will fall 30 per cent from their peaks of last year and not recover to that level for another decade.

Bernard Hickey
Spiraling into a long deep slump
Herald on Sunday. 14 December 2008

. . . house prices will decrease only 5-10 per cent by the end of the year.They will stay flat over next year but rise in 2010. “It is quite amazing the number of people who seem to believe we should be predicting massive price declines in the face of fundamentals which suggest otherwise.”

BNZ economist Tony Alexander, quoted in
10 good reasons to buy property now
Herald on Sunday. 14 December 2008

5 Comments »

  1. Every time I read a piece from Hickey I get the distinct impression he’s divining his “insights” from a magic 8-ball or an Economics 101 textbook without all the variables plugged in.

    Comment by Chris S — December 14, 2008 @ 11:50 am

  2. Let’s see, how’s Tony’s track record? Here he is in August last year, right when the NZ housing market was starting to slump:

    “Short of a world recession it is extremely unlikely that house prices in New Zealand will on average fall in the next couple of years. There is extremely strong ongoing support from the very tight labour market, high wages growth, rising construction costs, a backlog of people wanting to get houses built and wanting to buy existing houses and frankly hoping for weakness in the market, plus the 2008 tax cut competition between
    the major political parties which will kick off in a few months time. A lot of people over the past few years have made some very bad predictions that house prices will fall because they have failed to take into account these factors plus many others which we have repeatedly mentioned as insulating our economy against negative impulses such as the high currency and high interest rates. Only in the event of a global recession are we likely to see NZ houses prices falling 5% – 10%. Such a
    recession is extremely unlikely.”

    Comment by Dave — December 14, 2008 @ 12:41 pm

  3. Tony’s big cock-up was in not picking the global economic troubles, especially given that things had started to unravel in the US when he predicted a global recession as extremely unlikely. Anyway, I suspect that somehow they’ll both be wrong, and that that won’t stop them from making further wrong predictions on all manner of things in future. The real mystery is why anyone listens. I guess they’re less wrong than Bruce Shepperd, so at least that’s something.

    Comment by Guy Smiley — December 15, 2008 @ 5:05 am

  4. It’s probably a good thing that the Herald on Sunday is printing both pieces rather than just one and presenting it as The Truth about the property market. Not sure if that was intentional though.

    Comment by helenalex — December 15, 2008 @ 12:04 pm

  5. Alexander was saying around 8 months ago the property market would recover in 2009.

    Alexander will get it right at some stage.

    Comment by Simon — December 17, 2008 @ 7:33 am


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