Monday, August 12, 2013

House Prices in New Zealand v Gold, July 2013

In July, 2013, the gold ounce to house price ratio has moved in favour of gold.

Looks like my call that that house prices were high at the end of June because of timing issues, was timing issue with the figures at the end of June. Especially as gold was at a bottom.

The median house price in Auckland is down another 0.5% according to the REINZ website. Again, people are being hoodwinked with the local media still spruiking house prices. Caution needs to be the order of the day if you want to speculate on houses. Just today, people are still thinking house prices will rise significantly from now to match the run-up from 2004 - 2007.

Right now, it appears that a majority of the excess reserves of US Fed printed money ($85 billion per month) is headed to overseas banks ($43 billion per month). This no doubt fuels the housing market here. Once this is taken away, all sorts of distortions will occur. See here.

It now takes 27 gold ounces less to buy the median priced Auckland house than it did in June, and 23 ounces less to buy a median priced house in New Zealand.

Gold in New Zealand dollars: $1638.05 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)
Low since previous high: $1532.30 (28 June, 2013)

Silver in New Zealand dollars: $25.62 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
Low since previous high: $23.51 (28 June, 2013)

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