Economic commentator Bernard Hickey says New Zealand’s long-standing reliance on rising house prices as a driver of wealth and economic growth has reached a turning point, arguing that the country’s housing-focused model is no longer delivering the gains seen over the past three decades.
Speaking on the Notes from the Executive podcast this week, Hickey said New Zealand had effectively become “a housing market with bits tacked on”, with economic growth increasingly tied to residential property values rather than productive investment.
Hickey said strong house price growth from the 1990s through to 2021 encouraged New Zealanders to view property as the primary path to wealth creation. However, he argued that the combination of high debt levels, tighter lending rules and Reserve Bank restrictions on mortgage lending means the conditions that fuelled previous property booms are unlikely to return. “We bet everything on the house,” he said. “The game is over.”
According to Hickey, New Zealand’s economic performance has weakened since 2023, with GDP per capita flat or declining. He attributed this to decades of capital flowing into housing rather than businesses, infrastructure and other productive investments. He argued that the absence of a capital gains tax and limited incentives to invest through retirement savings schemes encouraged investment in residential property at the expense of other sectors.
Hickey said the Reserve Bank’s introduction of loan-to-value restrictions and debt-to-income lending rules had effectively capped the ability of households to take on more mortgage debt, reducing the potential for another major housing boom. While lower interest rates could provide some support, he said they were unlikely to recreate the rapid property price growth experienced in previous decades.
Hickey also linked New Zealand’s economic model to migration policy, arguing that strong population growth helped sustain demand for housing and labour. He said successive governments had benefited from increased tax revenue generated by migrants, while infrastructure investment often failed to keep pace with population growth. Hickey maintained that migration itself was “not the problem”, but said governments had not adequately invested in housing, transport, health and other services needed to support a growing population.
Hickey warned that high housing costs, expensive rents and limited opportunities were contributing to an ongoing outflow of New Zealanders to Australia. He noted that many younger New Zealanders saw better prospects across the Tasman, particularly following changes that improved access to Australian healthcare, education and citizenship pathways.
Looking ahead, Hickey said New Zealand faced a choice between attempting to reignite the property-driven growth model or transitioning towards an economy more focused on productive investment. He suggested the country remained in a period of uncertainty, with political debate likely to continue over housing, taxation, migration and economic reform in the lead-up to future elections.
The “education” “industry” doesn’t produce productive people. It produces administrators and bureaucrats – administering quite what and bureacrating quite where is a bit of a conundrum although in wokie clown world there is no shortage of grifts to grift on.
Agree 💯. The Tertiary institutions are Visa factories for 3rd world mediocre imports.
Too many unproductive people in this country. 410,000 receiving a benefit of some sort, teachers, police, public servants, politicians, lawyers…….all paid far too much for producing sweet fat nothing.
Then there’s the boomers who made all their money using their age advantage, inheritances, negative gearing and interest claiming for tax purposes hoovering up all the houses to rent to their kids and grandchildren whilst taking the super.
Too much greed, too many incentives to use houses to gain wealth while screwing everyone else. This country is full of parasites. I think even you Bernard Hickey can be guilty of spruicking the market along with all the real estate agents and all these disgusting people like than man in Hawke’s Bay who owned so many houses he stop telling people. Pure GREED. Then there is all those programs like the block, newspapers like stuff feeding off the frenzy while we import MORE people to fuel this disaster. GREED GREED GREED.
The real GREED is ownership of HUGE mono-cultural farms by a very small number of people and multi-national corporations.
Smaller land holdings shared among millions of citizens with diversified agricultural horticulture is where our country’s wealth waits to be enjoyed.
Cities are human chicken coups of misery.
Break up the vast singular land holdings (which was done by the government in the early part of the previous century in regard to fairness of distribution) and enable citizens to transition from cities onto the arable land.
Land they own and care for, sharing their produce and wisdom amongst the local integrated communities: this is the way to increased happiness and wealth.
it will take a revolution to create this. Alas, the greedsters are too stupid in their greed to read the writing on the wall.