r/investing
Patrick Boyle on the New Zealand housing Bubble and Burst
Patrick Boyle uses NZ's housing crash to warn that decades of falling rates fueled asset bubbles, causing negative equity and economic stagnation.
- Decades of declining interest rates artificially inflated asset prices without creating real wealth, leading to unsustainable valuations.
- Political interventions to protect home prices distort markets, resulting in negative equity for recent buyers and insolvency for construction firms.
- Treating housing as a speculative investment rather than shelter harms labor mobility and long-term economic productivity, risking Japan-style stagnation.
https://www.youtube.com/watch?v=qROG2uXPChY
Patrick Boyle uses New Zealand’s housing bust as the warning example here. At the peak, an Auckland “dunger” sold for NZ$1.81m, and average Auckland homes were around 35x median income. Since then, prices have dropped hard, recent buyers are stuck in negative equity, and a bunch of construction firms have gone under.
Main point: decades of falling interest rates let people borrow more with the same monthly payment, so prices got bid up without much actual wealth being created. Politicians made it worse because homeowners vote, so governments keep trying to protect house prices with subsidies, tax breaks, first-home-buyer schemes, and restrictions on new building.
The ugly part is that housing stops being shelter and turns into the national retirement plan. Older owners feel richer, younger buyers get wrecked, workers leave expensive cities/countries, and productive places become too expensive to live and do business in.
He compares the possible endings too: Japan let its bubble deflate slowly and got decades of stagnation, while the US/Ireland crashes were brutal but reset faster. His conclusion: economies cannot grow well if houses are treated like tech stocks with roofs instead of places to live 27:46.
Patrick makes great content. His video a couple weeks back evicerating the space x ipo was gold.
He has some great rap videos too.
That's his Sister Susan.
His work eviscerating the weirdo behind Meta is gold. US $88 Billion lost (so far) in his embarrassing push to have us live and work in his Metasphere.
The ugly part is that housing stops being shelter and turns into the national retirement plan.
As someone from NZ, this is one of the most painful parts of our culture around housing. So many people of the older generations have no substantial retirement savings. It's not uncommon for people to hit retirement age with maybe $200k NZ in the bank, and a house with no mortgage. They then rely on welfare for their living expenses.
If you are 70 with 200k and a house paid off, ostensibly 600k or whatever price value, sell the house, then lease it back, or sell and get a simple apartment.....200k and a house with no mortgage is not the worst situation in the world. How many folks actually have pension + 200k plus a 600-800k home paid off? You are only going to live maybe 5 to 15 more years at that point and basically have a million dollars....piece of cake to make all that work.
emotional attachment to the house overrides what makes sense financially. older people simply want to live in the home that they have been in for 30+ years.
Tbh this was official government policy for the western world for over a century. The fixed mortgage rate is an example of this. Getting people to save and invest is hard, housing acts like a forced savings piggy bank.
economies cannot grow well if houses are treated like tech stocks with roofs instead of places to live
I've felt strongly about this since I was younger. Housing should not be "an investment".
On Jacinda Arden:
When the person who used to run the country suddenly packs up and leaves, that's usually a sign that things aren't going well.
I thought he only did rap news, good to see him branching out!
My grandfather’s retirement home cost 9k a MONTH and he was still living independently. He lived to 94. The money runs out at that point. Say goodbye to any sort of inheritance for younger people to make their lives work….
Patrick sadly doesn't really do any actual deep dive in the topic the way he used to do when he started, now he just reads superficial data from several news articles and calls is a day.
His videos when he started were treasure trove of knowledge, and are must watch.
Investors are the worst thing to happen to elder care, I have seen it up close and personal. They are hiring medical folks from over seas with inferior educations, they cost cut in every corner of the room, the old folks suffer....profit greed and caring for old folks do not mix. Equity companies can go to hell after what I saw in elder care recently, straight to hell.
I hope nobody sold ETFs because of his previous videos on Iran war.
Doomerism sells well on YT and Reddit, but it's often a poor investment strategy. Sometimes the metrics he chooses are also cherry-picked to paint a narrative and it skips over rational explanations that would make his case weaker.
This video on NZ seems good on a first glance and it makes a lot of well known observations about HCOL cities making high-paying jobs inefficient, but I don't understand why he acts as if citizens aren't able to build new housing on their own in NZ if they want to. I don't think building a house in NZ is impossible, government doesn't have monopoly on it.
I think comparing price of an apartment to a house in London specifically is not reasonable - London is just 15% of UK, apartments can have high square footage too, prices of apartments lowering is a good thing for people interested in living in London, and building a new house in London is something that's obviously would be challenging due to lack of space. Not everyone will afford a house in London, I think this was well understood even 30 years ago.