Here’s a word to add to your investing vocabulary: Dungers. The term for dilapidated, crumbling houses comes from New Zealand, which is in the grip of a striking property boom. The country topped Bloomberg Economics’ risk radar in June for being the most unaffordable housing market in the world. Judging by the dunger that sold for NZ$1.8m in January, quality is no obstacle — and neither is price.
Real estate consultant Knight Frank’s global price tracker shows 128 out of 150 cities saw prices rise year-on-year in the first quarter of 2021, with 43 growing at double-digit rates — more than twice the amount in the previous year. New Zealand is a fitting poster child for what’s going on, rather than a densely populated global megacity such as New York or Hong Kong. The island country’s isolation and record fighting Covid-19 have attracted Silicon Valley preppers and domestic investors alike, with one woman buying five homes in one year. Even after restrictions on property speculation introduced by Prime Minister Jacinda Ardern’s government, the less wealthy are racing to keep up.
There may be sound reasons for going short big cities and going long the suburbs right now, and there may even be sound reasons for overpaying a little for one’s dream home. But a lot of current bets seem driven by short-term pressure. And the trends driving this dash could easily reverse if the post-pandemic “normal” ends up looking a lot like more like the megacity-dominated past than we expect. In the meantime, the temptation to speculate is luring home-flippers from the US to Australia.
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