Auckland Housing Market: Will House Prices Crash Another 10%?

Asked whether a buyer, concerned about another 10% drop, should hold off buying, Bishop said: “I’m not going to be giving advice around buying and selling houses. People can see their own circumstances for themselves and they can also see the economic forecasts and the information that is out there.” Most forecasters predict house prices will rise in the mid-single digits this year. Bishop has been one of the few political figures from either side of the political spectrum to support falling nominal house prices. For most recent political history, both National and Labour politicians have supported rising nominal house prices and pinned their hopes for affordability on increasing wages faster. In summer of 2020-2021, after a 20% increase in prices, Dame Jacinda Ardern, then the Prime Minister, only said prices could not increase as they had been – not that they should fall. Ardern had just won a historic majority and was in quite a different position to the current National Party, with some MPs now concerned the housing market is weighing on the party’s popularity. The Government is planning to tweak directions to Auckland Council over Plan Change 120, which zone for up to two million houses to be built in the city, mainly through intensification, over the coming decades. It would be extremely unlikely that all two million actually got built, but the city’s property market has struggled from a lack of confidence since the crash and National’s Auckland MPs are grumpy about intensification of the areas they represent. Bishop pushed back on that critique, saying: “I think a lot of National supporters do like our focus on housing.” He said the two million figure had become an “unfair lightning rod for criticism”. Bishop said he began work on the proposed tweaks in December “to make it more politically sustainable”. He was gathering with fellow National MPs at his party’s caucus retreat in Christchurch. Other MPs gave different responses. Asked whether Aucklanders thinking of buying a house should have confidence, Finance Minister Nicola Willis said “yes, absolutely”. “I am delighted that under our Government, the number of first-home buyers has increased significantly, that is a good sign,” Willis said. “Part of what we need for people to feel confident about the future is a sense that they can have a stake in New Zealand. “You should buy a house in Auckland because this is a country with great prospects where you can have a great life, provide awesome opportunities for your children and having a housing asset often enhances the security that people feel about that future,” she said. Willis agreed with Bishop about affordability. “Fundamentally, we are a Government that wants to see housing [be] more affordable and we recognise that will require more homes in Auckland and we need to have planning rules that will permit that,” Willis said. “At the same time, we have a balance to strike about how that occurs.” Paul Goldsmith, who contests the Epsom electorate for National – a focal point for opposition to Plan Change 120, said, when asked whether Auckland home buyers should have confidence in the market, said “absolutely!” Asked whether they should be worried about a further 10% crash, Goldsmith, began to say “no”, before correcting himself and saying, “well, we’re doing everything we can to have a strong economy, but ultimately I’m not going to comment on house prices”. “For generations of Kiwis, buying their own home has been a core part of creating a life for their family and a great financial asset,” he said. North Shore MP Simon Watts said buyers should “absolutely” have confidence. “You’re seeing it in my electorate in the North Shore, [there are] no issues in regards to appetite around that, obviously the challenges around the broader economy are getting better and the signals are looking more positive as we come into the new year.” Watts offered some support for Bishop’s plan. “I think one of the challenges that I hear within my constituency, particularly from those that are entering into the market, is that they want to be able to buy their first home, they want to be able to do so in a manner which is affordable to meet their means, and that’s been a challenge over over a number of decades,” Watts said. He said there needed to be “balance” from the plan change. Asked whether a further 10% drop would concern him, Watts said he would not speculate what an appropriate price should be.