Thursday, June 21, 2012

House Prices in New Zealand v Gold - May, 2012

Here are the latest median house price figures for New Zealand. May saw a another small two ounce shift in favour of gold (ie. it took two ounces of gold less in May than April to buy the median priced house) for New Zealand overall and Auckland.

Note though, how property investor groups and real estate experts are still trying to lure as manyas they can into the booming Auckland market.

For me, property is for living in and the boom times for investemnt are over. The banks mis-allocated easy money into the property sector from 2000 to 2007, as this created the biggest bang for their cheap bucks.

Naturally, people readily took this cheap money to invest in housing; after all, housing will go up forever and the equity gained will look after them in retirement. Phew, there are so many things wrong with that argument.

Anyway, banks should have been investing this money in capital formation. Creating jobs. Instead we are now left with a generation in huge debt and a system about to bust.

And the banks are still spruiking property as a great investment. Just look at the figures out for new mortgage applications. This will end badly for those using property as investment vehicles.


click to enlarge

click to enlarge

Auckland house prices have dropped nearly 62% against gold since May 2005. Click to enlarge.

Gold in New Zealand dollars: $2018.59 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $35.33 per oz
Previous all-time high: $59.19
per oz (30 Apr, 2011)
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