By Susie Nordqvist
A leading property commentator says another property boom is on the horizon and next time the bust could be bigger than the last.
The warning comes as new figures out today show property prices increasing once again.
“It is not a major bubble, nothing like the one that we had five years ago. But there are stirrings, there are froths, there are small bubbles,” says property investor Olly Newland
Mr Newland sees some signs of a bubble in the inner city suburbs, where prices have jumped by up to 40 percent in some cases.
He says if those bubbles pop the bust will be bigger than the last.
“It will be a very messy bust I'm afraid. It will look like the last bust was nothing. It would be very dangerous and I'd certainly be getting out of the way,” he says.
But many estate agents aren't convinced.
“I personally don't think there's a bubble going on. I just think we've got a bit of a catch up. We had people sitting on the fence for a fair while and now they've decided the world's not going to end tomorrow we'll get on and buy,” says Anne Duncan of Anne Duncan Real Estate.
She admits affordability may become an issue for some.
Economist Gareth Kiernan says our housing market is overvalued, which should reduce the risk of another bubble.
He says even with record low interest rates, people are still wary of taking on too much debt.
“They may be able to service the mortgage now, but in two years time it's potentially a different story when those mortgage rates rise,” says Mr Kiernan.
Newland says hiking interest rates won't prevent another bubble, but freeing up more land for new housing might.
But all of this is little comfort to Auckland property buyers with the median house price in our largest city now $500,000.
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