This is a painful blog post for me to write.

Back in February I predicted that New Zealand house prices would fall around 30% from their peak in November last year over the next couple of years. I said prices would then take a decade or so to recover to that November 2007 peak.

I was ridiculed. It would never happen, I was told. House prices never fall in New Zealand, they said. Prices just take a rest for a few months and then keep rising forever. Real estate agents, real estate investment scheme spruikers and even a few bank economists repeated the “accepted truth” that house prices double every 10 years. Stop being a scaremonger, I was told.

It turns out this 30% fall is happening even faster than I predicted in some areas. The trouble (for me) is it has happened first in the area I live in and 18 months earlier than I expected.

REINZ figures show the median price in the Mt Eden/Epsom area in Auckland has dropped 30.4% to $483,750 in the three months to July 31 from the same three months a year earlier. There were 870 sales over that three months so this wasn’t some sort of distorted figure.

To add insult to injury, prices in Mt Eden/Epsom are now down 4.2% in the four years to July this year. This is the only part of the country where prices have fallen that much or at all in the last four years.

We bought our house in Epsom in May 2005.

The real estate gods are punishing me for my rash prediction…

Last 5 posts by Bernard Hickey

• Dear John: Please tell us the truth about the economy - we can handle it - February 23rd, 2009
• Kill the glass white elephant in Dunedin with a rates revolt - February 9th, 2009
• A ‘rolling maul’ budget is better than an ‘up the jumper’ miracle - February 8th, 2009
• Why we should give thanks when Telecom ‘exports’ 250 jobs to Manila - February 4th, 2009
• Freeze public-sector wages and lift the minimum wage - February 2nd, 2009