Last week's property statistics were horrible for anyone hoping to get on the property ladder in Auckland, says Liam Dann.
On the surface they looked promising. But that hint of change in the market was really just a tease. It's as if the market was trolling first home buyers. Quotable Value New Zealand data showed Auckland region prices fell 0.2 per cent in the three months to the end of March.
The annual rate of growth for the Auckland region fell to 12.3 per cent - down from peaks above 20 per cent in 2015. But it's not nearly enough to change the game for first-home buyers. Not even close.
If you convert that 12.3 per cent rise into dollars (which, unfortunately, is what we have to pay for things with) the average value of a house in the Auckland region rose by $114,000 in the past 12 months.
I'm not sure how many flat whites that is, but if I was young and contemplating the Auckland housing market I'd waste my money on something a bit stronger.
Normal people should probably just give up. If you are on any kind of regular wage then scrimping and saving to buy a house is futile.
Keep saving, by all means. Save hard, boost your KiwiSaver contributions, start a share portfolio, maybe even start a business. But stop thinking about the housing market.
Based on the case studies we've seen in the media in the past few weeks some young people are so desperate to own a home they are gearing every aspect of their life towards it. They are effectively learning to become property investors in order to get into the market. This is a terrible way to resolve the housing crisis. The last thing New Zealand needs is more property investors.
To quote Dr Oliver Hartwich from economic think tank The New Zealand Initiative: "Booming property markets create a mirage of wealth, not wealth itself." That's not a lefty liberal, millennial view. That's the view of most economic and financial market experts in this country.
The real extent of this problem is laid bare when you consider we now have a consensus between the disaffected Left and the financial establishment on the Right.
We've admitted we have a problem, we know the behaviour is damaging us long term - but we still won't address it.
That is how psychologists define addiction these days. New Zealand has a property addiction.
As Hartwich points out, we could add two zeros to the price of every house in the country and we'd all be at exactly the same place on the property ladder.
We'd have created no new wealth for the nation. We'd simply have widened the gap again between the haves and the have-nots.
The base price of a house is now so high that, even as growth slows, it is laughable to talk about young house hunters bridging the gap by giving up a few treats.
If Auckland growth keeps slowing we might soon see annual percentage price increases back into single digits.
The maths will still be hopeless.
We've admitted we have a problem, we know the behaviour is damaging us long term - but we still won't address it. That is how psychologists define addiction these days. New Zealand has a property addiction.
In January 2013 the average Auckland region price was $610,000 and the annual growth rate in Auckland that year was 14.5 per cent.
That meant prices rose $88,000.
The average value in Auckland to the end of March this year was $1.045 million.
The annual growth rate needs to drop to 8.5 per cent just to bring the nominal rise back to an $88,000 annual increase.
But wait, it gets worse.
The latest QV numbers showed a quiet summer. Prices declined by 0.2 per cent for the months of January, February and March.
The February QV report showed Auckland prices fell by 0.7 per cent in the three-month period for December, January and February.
That means they actually rose again in March.
Real estate agent Barfoot & Thompson's numbers data for March, also released last week, confirmed this.
That "suggests there remains some way to go before the Auckland housing market rebalances", ASB economists noted in their commentary.
It is hardly surprising. We know Auckland's supply and demand issues have not been resolved.
The population is still growing much faster than we can build new houses.
Exactly the same thing happened this time last year. New rules and regulations came in to force in October , cooling the excesses of the market for a few months, then it all came back again in March.
We need a big structural change to put the equation back in balance for young New Zealanders.
This Government has grudgingly in the past year or so started to acknowledge the problem.
It thinks it is doing enough but it isn't. It is too comfortable hiding behind the mirage of wealth creation.
It has been a convincing illusion, creating a confidence that has driven very real domestic growth.
It may even get National through the next election, but it's not sustainable.
The next Government, regardless of which party forms it, needs to confront housing inequality.
Otherwise New Zealand will eventually have its own Brexit or Donald Trump-style backlash.
That would be terrible for all of us.
The populist rebellion of angry voters would be a harsh intervention that forces us all to go cold turkey.
