How do you calculate these numbers?
In simple terms, we look at how fast property prices have gone up in the past (the good and the bad).
Then we run 30,000 random simulations based on that data. This gives us a sense of what might happen in the future.
In technical terms, this is called a Monte Carlo simulation. Financial advisers use it to estimate risks and probabilities.
So if Auckland has a bad run of property price growth, it could take up to 8 years to recover.
If you have a good run, your house value could bounce back in 2 years. The average is 4 years from today.
Lower Hutt will take longer to recover
Lower Hutt will likely take another 7 years before house prices fully recover (2031). Though it could easily range between 3 and 15 years.
The reason is twofold:
- Property prices have fallen further than Auckland. They are currently 26% below the peak
- Property prices don’t tend to go up as fast in Lower Hutt compared to Auckland.
Hamilton will be a bit quicker
Prices in Hamilton are down 13.4% compared to the peak. They haven’t fallen as much as Lower Hutt.
That’s why prices there will likely recover in 4 years.