Baby boomers are roughly 20% of the population in Australia and New Zealand, and they own more than half of private wealth.

In New Zealand, half of household wealth sits in property, built through the buy, borrow, die strategy. A strategy dependent on banks’ willingness to lend against an asset they helped inflate. Then 2021 hit. The CCCFA arrived, designed by politicians to throttle lending supply by forcing banks to judge you for every Snickers bar at the pump. Many made financial decisions on believe that lower interest rates would persist indefinitely. Classic entrapment. The central banker played bait and switch, and once we bit, they turned up the screws. Then tighter lending rules followed, and a government overplaying its hand, going after property wealth while pretending it was about solving a ‘housing crisis’. The result? Many property owners watched 40% of their real purchasing power evaporate in five years. And that’s assuming you believe the official inflation stats, which anyone paying for groceries, insurance, or healthcare knows is a generous oversimplification. The old promise that property would double every seven to ten years? Replaced by one thing that actually did: your rates bill.

If demographics is destiny, boomers, we may have a problem. The above graph is hypothetical, but what if the value of our housing stock is built on a false assumption the next generation is willing to become exit liquidity?

The housing crisis was politicized from the start. Everyone had a different enemy: not enough social housing, rich investors locking out first home buyers, or the over-financialisation of what should be a ‘human right’. The government decided the answer was high density housing, so they poured money into it. Then immigration dried up. Now we’re left with shoebox apartments nobody wants to buy, built on a phantom crisis that never actually existed. First time buyers who locked in off the plans are now underwater. The free market got corralled out of the picture, and what we’re left with is a distorted mess. It’s the laws of supply and demand that’ll fix this, but it was government control that broke it in the first place.

But is this really evidence that property no longer works, or just a different stage of a normal cycle?

Property markets…Read more on substack.