“End game” arrives for New Zealand’s deranged housing market

The latest “Tony’s View” report from prominent New Zealand housing bull, Tony Alexander, claims the “end game” has finally arrived for the nation’s housing market:

Over a year ago I said that NZ’s housing market had entered the endgame for the cycle regardless of whether you started the boom from 1992, 2012, or June 2020.

The end has come about six months earlier than the June quarter 2022 timing I was expecting and that is largely because of the credit crunch. This involves the tightening of LVR restrictions from November 2021 and the crushing effect on bank willingness (not ability) to lend of the Credit Contracts and Consumer Finance Act.

In the mix also are:

  • the new tax rules for investors,
  • diversion of spending back to travelling overseas,
  • failing of some builders scaring away new orders for houses to be built,
  • near total loss of FOMO (fear of missing out) around all the country, and
  • an especially rapid increase in fixed mortgage interest rates…

On the way up people looked for reasons to buy property even though it was already highly priced. In particular people bought on the basis that prices would keep rising, that other people would pay a greater price either to get the house to live in or to treat it as an investment.

People tend to think that this sort of thinking is associated only with investors being greedy. It is not. It is the great unwashed engaging in thoughts that they are idiots not to buy and that others will keep buying which really gets a market soaring upward. Crypto shows this in spades…

If people looked for excuses to buy on the way up, now they will look for excuses not to buy or even to sell on the way down…

This ball of psychology driving people to step back has only just got rolling. My best pick is we will be in that endgame from some point next year. From here we will actively be looking for the negative housing headlines…

The net proportion of agents seeing prices as falling in their location has increased, we are in more of a buyer’s market than perceived a month ago, FOMO is more dead than a month back, fears of prices falling after making a purchase (FOOP) are greater, and even fewer people are attending auctions and open homes.

New Zealand experienced one of the biggest house price booms over the pandemic, which pushed its price-to-income ratio to the highest level in the English-speaking world:

New Zealand house price-to-income ratio

New Zealand has the English-speaking world’s most expensive housing.

The Reserve Bank of New Zealand (RBNZ) has already aggressively lifted the official cash rate (OCR) from a low of 0.25% in August to 2.0% currently, and has flagged further hikes to 3.9% by June 2023.

No wonder Tony Alexander has called the “end game” for the nation’s housing market. If the RBNZ follows through with its forward guidance, then New Zealand’s housing market is facing its biggest price crash in generations.

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. DingwallMEMBER

    People tend to think that this sort of thinking is associated only with investors being greedy. It is not. It is the great unwashed engaging in thoughts that they are idiots not to buy and that others will keep buying which really gets a market soaring upward. Crypto shows this in spades…
    😲 I wonder how many of “the great unwashed” he happily helped buy in the frenzy……….

    • Yeah but your partner isn’t gonna leave you if you don’t buy a crypto (or however it goes), so that’s a major point of difference.

  2. Hugh PavletichMEMBER

    Average cost to build 3-bed home skyrockets – QV … Radio New Zealand / Television Mew Zealand


    The average cost of building a three-bedroom home is nearly 21 percent higher than a year ago, according to Quotable Value. … read more via hyperlink above …

    David Hargreaves looks at curious developments in the way the paths of potential interest rate rises are crossing the paths of potential inflation – and causing very real mortgage pain … David Hargreaves … Interest Co NZ


    ‘The surprise, if anything, is that they [house price expectations] didn’t fall further,’ says ASB … Greg Ninness … Interest Co NZ


    Money changes everything: Kiwis quitting cities in search of low-cost life … Kevin Norquay and Olivia Caldwell … Stuff New Zealand
    … google search ‘housing affordability stuff new zealand’ …


  3. Dingwall is spot on.

    I know of some of my ultra leftist family who can barely make ends meet but they’ve used their collateral to purchase ‘investment properties’ in poor suburbs. I enjoy calling them slum landlords, which they are. I know of others who own ‘investment properties’ when they can barely cover their own mortgage, one couple bought even as they separated…

    People got giddy on greed and it serves them right. For mine, I sold into this a year ago… missed the high and got laughed at, but people no longer laughing.

    The NZ economy is facing a hard landing. It’s blind obvious. Yet no one, including the bank economists, wants to mention it…


      Straya too! Canada’s off 6pc month over month. Straya next in line. Some real dislocation in the offing. Welcome to illiquid markets when they go no bid, cnuts. So many dumbass bagholders that reckon “property only goes up ™”. Shame it’s just the entire economy that’ll get rekt.

      • A core problem we face is that government officials and politicians seem to think that a recession should be avoided at all costs. Fools.

        A recession is actually a perfectly natural part of the capitalist system, and is in fact possibly THE most important part of what makes capitalism work. It forces entities – households, business and government – to be prudent in their money management, it weeds out companies that are inefficient allowing those resources to be re-allocated to higher returning entities, and it ensures that imbalances are modest. Our ‘leaders’ need to go back and read Hayek, Schumpeter, Keynes and, especially, Minsky.

        Minsky wrote two books “Stabilising an unstable economy” and “Can IT happen again” which are really required reading. He argues that attempts to prevent recessions leads to a deterioration in asset quality, larger imbalances, and increasing instability, which will ultimately be tested leading to a much deeper and more protracted recession. If only our leaders – in government, business, the media etc… actually read and studied instead of just bullshitting all the time…

        A mild recession at this juncture would be perfectly normal and reasonable. And so what if some households who’ve been greedy go bust?

  4. Hugh PavletichMEMBER

    NZ house prices forecast to drop 18% from $905,000 to $740,000 – Jarden analyst … Anne Gibson … NZ Herald


    Investment firm predicts average NZ house prices to plummet to NZ$740,000 … Newshub


    Is the rental market finally good for renters? … Reweti Kohere … the Spinoff


    … Housing and cost of living are by far and away Kiwis greatest concerns …

    Ipsos NZ Issues Monitor – February 2022


  5. JoeJackMEMBER

    The irony is that Jacinta Arden was originally elected on the basis of bringing both immigration and housing prices back to manageable levels. Yet she did exactly the opposite.
    She is likely to go from being hugely popular to being lynched. If this plays out as outlined here, she will fully deserve it.

    • She deserves to be turfed out. But will she? It doesn’t seem like she is going anywhere for a while.

      Politically, New Zealanders are evidently like Australians: complacent, apathetic and easy to con and screw over.

  6. – With interest rates back to where the were in early 2020, property prices also have to come down to levels of early 2020.

  7. Hugh PavletichMEMBER

    Essential viewing …

    The rough road ahead from fantasy economics to reality economics … some (just some) points to consider …

    JP Morgan CEO Screams Economic Collapse | Unseen Interview … Stoic Investor


    Liam Dann: The big storm warning we should take seriously … New Zealand Herald
    … behind paywall …



    Jamie Dimon, chief executive of giant investment bank JPMorgan Chase, just warned that the American economy has a hurricane headed its way.

    If it does, then so too does New Zealand – although I guess we’d call it a cyclone down here in the Southern Hemisphere.

    Hurricane, cyclone, whatever. Dimon was reminding us that we are still headed into the storm.

    It was a chilling warning from someone who’s had a birds-eye view of the US financial system for decades.

    Dimon has been JPMorgan CEO since 2005, he steered it through the Global Financial Crisis. He’s been on the US Federal Reserve’s board of directors.

    He’s a billionaire but he’s no Elon Musk – which is to say he doesn’t joke around with frivolous comments on social media. (behind paywall) … read more via hyperlink above …

    • Hugh PavletichMEMBER

      Check our follow up …


      UPDATE … The rough road ahead from fantasy economics to reality economics … some (just some) points to consider …

      Australia’s new Federal Treasurer Jim Chalmers starts to make things clear in the lead up to the new Governments October Budget …

      Australia Inflation Accelerated Further From 5.1%, Chalmers Says … Michael Heath … Bloomberg / Financial Post

  8. Yet Leith you remain incredulous that the RBA could raise like RBNZ in line with market expectations. What is different about Australia that we get to avoid this carnage?