Inflation, corona pandemic, low interest rates: In recent years, savers have increasingly invested in real estate to secure their prosperity. With clearly noticeable consequences. The prices for houses and apartments have risen to absurd heights. But it is not only in Germany or Europe that average earners can often simply no longer afford real estate.

The crisis in New Zealand is particularly evident. In Auckland, in the north of the country, a boathouse that didn’t really deserve the name was recently sold. This is reported, among other things, by the British “Guardian”. The converted garage with its own jetty is listed and has neither a bedroom nor a kitchen or a toilet. Nevertheless, a buyer put an astronomical two million New Zealand dollars (1.13 million euros) on the table for it.

Mind you: not to be able to call the boathouse your own. With the purchase, he has not acquired the right of ownership, but only a license to use it. The zoning regulations also state that the shed may not be permanently occupied or overnighted. It is specifically advertised as a “vacation cabin,” not a residence.

It may sound absurd, but property prices in New Zealand are currently in a tailspin. Compared to the peak during the corona pandemic, prices have fallen by almost 18 percent to date. But the average single-family home is still worth $950,000 (€536,000) – about 12 times the average household income.

In large cities in particular, exorbitant prices are still being asked for apartments and houses. Last year, a run-down Auckland home in what the real estate agent described as “disastrous” sold for $1.7 million. A mansion that had been abandoned for years, with no toilet and smashed windows, even sold for just under $2.1 million (1.2 million euros).

The reason for these adventurous prices is primarily the inflation caused by the corona pandemic and the Ukraine war. At the beginning of 2020, the average price for a single family home in New Zealand was just under $755,000 (€426,000) and has risen to $1.1 million (€621,000) in two years. The government reacted by tightening tax regulations for real estate investors, and the central bank raised the key interest rate several times.

The banks passed on the increasing borrowing costs to their customers in the form of ever-increasing mortgage interest rates. The result: a drastic downturn in the real estate market. The Treasury Department last month predicted that house and apartment prices will have fallen 21 percent by the end of 2023 – compared to the peak in 2021.

Nevertheless, real estate remains the most important investment in New Zealand. Since there is no capital gains tax in the country and there is a long-term housing shortage, many savers invest their money in “stones”. According to the Central Bank of New Zealand, 57 percent of the country’s wealth is tied up in real estate.

Even though interest rate hikes have caused prices to fall sharply, some home sales are still breaking records – like that of the boathouse in Auckland.

Note: In the original version of this text, “houseboat” was used instead of “boathouse”. We have corrected the error and we apologize.

Sources: The Guardian, 1News.