Friday, September 9, 2011

Auckland House Prices; Measured in Gold

Here is the second part of the series on gold verses property.

As I said yesterday, I have the figures for Auckland today, because, like other large cities worldwide (this goes for Sydney and London at least), house prices in Auckland have held up better than the national average.

However, I did note an article from the Telegraph today stating that the property bubble in London is about to burst. The number of "distressed sellers" is rising for the first time. This will be interesting to follow in the coming months.

Here are the facts about Auckland's property market as compared to gold.

The gold ounces to house price ratio in Auckland also peaked in May 2005 at 635 ounces to buy the average house. Again, I am going to take this as being the height of the property boom (as measured in constant money - gold). The average house price at the time was $372,000 (compared to the high in November, 2010 of $490,000 which equaled only 276 gold ounces).

So, in 2005 the average house cost in Auckland was 635 ounces of gold equivalent. For July 2011, this average Auckland house price dropped to 254 ounces of gold. Therefore, from the high to July 2011, houses have dropped by 59% against gold.

So, even though, at the average price of $474,000 in July 2011, house prices have increased by 22% in dollars since May 2005, they have actually decreased by 59% when measured against gold. This is a similar figure to the 60% nationwide as reported yesterday.

I would welcome someone doing their own analysis on this to see if my figures are correct.

The house price website I used was: www.reinz.co.nz

Have a good weekend. In New Zealand, the World Rugby Cup begins today. Go the All Blacks!
Gold in New Zealand dollars: $2246.72 per oz
Previous all time high: $2279.35 per oz (23 Aug, 2011)

Silver in New Zealand dollars: $50.97 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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The Anglo-Far East Company
The Original Private Gold and Silver Bullion Custodian
Your reference: an-001
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