I recently attended a presentation by BNZ’s Chief Economist, Tony Alexander.

One of the topics that really caught my attention was his perspective on the things that influenced the housing market over the decades, from the 1950’s until today.

I wrote up a bunch of notes to summarise his points.

If you’re interested in getting a bit of perspective on the NZ property market, and some of the things that caused it’s near-relentless movement upward over time, then read on.


  • Single-income households were the norm.


  • The 60’s were when households started to shift from single-income to dual-income.


  • Deregulation
  • Increasing proportion of households with two incomes
  • Increasing narrative and expectation that “you need 2 incomes to buy a house”
  • Interest rate of ~18%


  • Fall in interest rates
  • Inflation went from 11% to 2%
  • A lot of money going into finance companies


  • Reduction in interest rates to 60’s level
  • Structural decline in inflation
  • As interest rates become lower, people gear up.

Recent years - things that have already happened

  • Retired people realised that term deposit interest rates are not going up, and are not going to sustain them in retirement.
  • Because of this, older people are going back into the housing market - a market that gave them good returns when they were younger.
  • People are expecting a minimum of a 30+ year retirement, and are investing for that (housing), expecting a capital gain over 30+ years
  • Cost of building houses keeps going up. Remodeling houses remains more cost effective.
  • More foreign buyers have come into the market
  • Migration flows coming back toward NZ, which caught us all by surprise after years of “Brain drain” narrative.

Other Points

  • We’ve never seen an accurate model to predict or forecast house price movements.
  • Companies can’t easily increase commodity prices due to ease of price comparison, price matching, and people shopping around. This reduces inflationary pressure.
  • Kiwibuild won’t increase the capacity of houses. Instead, construction will be redirected to Kiwibuild. This is because the housing market is constrained by lack of builders, lack of land, expensive approval process, etc.

Thanks for reading!

I hope you found this post useful. Do you have any questions? Are there any follow-up blog posts you’d like me to write relating to this? Feel free to leave any feedback in the comments below.