Aucklanders' love affair with property has been questioned by a leading economist who says renting makes more sense.
Shamubeel Eaqub of the NZ Institute for Economic Research said the latest Barfoot & Thompson figures - which revealed a record average house price of $618,707 - showed most buyers did not think renting was a viable alternative, yet it was better in the longer term.
"Would you buy a loss-making business?" Mr Eaqub asked, pointing out that many house buyers did not factor in the huge losses incurred through paying off a mortgage, maintenance and other expenses.
The NZX had performed on a par with the housing market in the past few years, yet people continued to favour residential property, he said.
Mr Eaqub rents in Wellington and said housing was a particularly bad investment if people examined the amount of money a mortgage and other expenses cost over a lifetime.
Even with interest rates at historic lows, buying a house and paying it off made little economic sense compared with other forms of investment.
"Be careful you don't get sucked into buying an expensive asset. There's nothing wrong with buying a house, but because house prices look so expensive it's less likely to be a good financial investment. You might be able to pick up shares for the same amount of money."
Brian Gaynor of Milford Asset Management and financial commentator Bernard Hickey have also recommended other types of investment, citing wider financial fallout from our love affair with housing.
Mr Eaqub said few people were questioning runaway prices and wondered why more experts, particularly other economists, did not blow the whistle.
Auckland Property Investors Association president David Whitburn said the choice of buying or renting depended on circumstances.
"It's a deeply personal choice ... In my own circle of friends, people do want to own because a landlord can sell their home and people risk being kicked out. So when they're starting a young family, they want to own because it gives them major security."
Of Mr Eaqub's position, he asked: "What's to say his landlord won't kick him out?"
Barfoot chief executive Wendy Alexander said October was one of the most active selling months the business had experienced.
"It was a month when buyer demand finally broke through the constraints buyers were imposing on themselves that had seen the average price move in a $10,000 band between $582,000 and $592,000 for five months," she said.
October sales were up 11.6 per cent on September and up 48.7 per cent on the same month last year.
Month | New Listings | Sales Price
January | 1031 | $529,768 |
February | 1552 | $536,069 |
March | 1537 | $571,076
April | 1266 | $568,018
May | 142 | $582,285
June | 1245 | $589,251
July | 1295 | $591,444
August | 1417 | $592,395
September | 1266 | $585,838
October | 1645 | $618,707
Source: Barfoot & Thompson