1987 was a big year for New Zealand. Optimism was in the air, we hosted the very first Rugby World Cup and a little-known director called Peter Jackson released his cult hit Bad Taste. As the All Blacks lifted the Webb Ellis Cup high in celebration of our win, the stock market too hit all-time highs. What a time to be alive! And then came Black Monday in the US. By Tuesday the 20th of October, the New Zealand market was in free fall and the life many had become accustomed to began to unravel, and fast. This month we look at the 1987 share market crash and the lesson we can apply to real estate today.
The Build-Up
The 1980s were revolutionary in New Zealand. After nearly going broke in the early part of the decade, a very different Labour Party headed by David Lange introduced sweeping reforms named “Rogernomics,” and they fundamentally changed everything. Even the family silver was up for sale.
Corporate raiders became household names, deals were stitched together, companies were chopped up and sold off again. Fortunes were made overnight. The public wanted in, and the easiest way was the stock market. But with little education, the public set about picking stocks the way they picked horses, on names not on form. And then came the rise of share clubs. Everyone was in one, neighbours, friends and work colleagues. I vividly remember being a party to rowdy share club meetings hosted in our family home. So much laughter and frivolity to be had! That was until the share market opened in New Zealand on Tuesday the 20th of October 1987. By the close of the day, the market had dropped over 14%. Over the next four years it would fall a further 46%. It took another 13 years just to crawl back to the same level as the peak and once those losses were adjusted for inflation, closer to two decades.
The Aftermath
If you’re feeling glum about today’s market, be thankful you didn’t live through the aftermath of the ’87 crash. Families and individuals lost everything. Debts were called in, homes and farms were sold, and the depression dragged on for years. Unemployment peaked at a whopping 11%, which is more than double today’s rate, and the nation’s mood was understandably bleak. A whole generation became deeply wary of the share market, vowing never to be burned again. Fool me once, shame on you; fool me twice, shame on me. Many people never recovered financially, retiring with little to show for a lifetime’s work. A generation of wealth simply disappeared.
1987 vs 2021
The stock market run of the ’80s lasted only a couple of years, and it took nearly nine years before the economy started to feel good about itself again. And this brings me to the property market. The downturn this country, particularly Wellington, has seen since November 2021 draws an eerie parallel. You’re often better to sell on the way down than to wait for recovery. Recovery always takes longer than people think. For example, if you had sold the day after the ’87 crash you would have been 14% down. If you held on, waiting for a rebound, you bottomed out at 60%.
Humans are naturally optimistic. A lovely trait. And it’s that same optimism that tricks us into thinking recovery is just around the corner. I can’t even count the number of vendors who withdrew properties from the market in 2022, citing waiting for the market to recover ‘next year.’ A few cuts away or a simple chant like “survive until 2025” keeps the spirits high. However, for those who have borne the brunt of this property market crash, that is they owe more on the mortgage than the house is worth, they won’t be chasing the next hot market. They’ve learned the pain of a drop and FOMO is no longer for them.
(And if you want a true blast from 1987, put on New Zealand’s number one song that year – Funky Town by Pseudo Echo.
The Wellington Market
Locally, things are looking brighter. In June, prices were down 3.5% year-on-year. By July, the gap had closed to just 1.3%. If momentum continues, we’ll likely finish the year in positive territory.
The bottom has been and gone. First-home buyers are back and even they admit it’s a good time. With spring on the doorstep, the next few months promise to be busy.
Wellington Market Quick Stats
What’s on in Welly?
Ed Sheeran – Loop Tour, Sky Stadium – 21 January 2026
Summer is set to be hotter than ever with a concert from Ed Sheeran in the mix. The British singer-songwriter is playing Sky Stadium on 21 January 2026 as part of his Australia and New Zealand stadium shows on the Loop Tour.
Blossom Valley, Aston Norwood Gardens – 6-28 September 2025
Every spring, Aston Norwood Gardens in Upper Hutt transforms into a fairytale wonderland. More than 350 sakura cherry blossom trees burst into bloom around the expansive gardens. By day, the entire landscape blushes pink. It’s the perfect spot for a date or a family day out.
Kevin Bloody Wilson, The Opera House – 11 September 2025
The bawdy comedy of Australian Kevin Bloody Wilson has been delighting and shocking audiences since the 70s. Now the outrageously funny (and outrageous) comedian is back. Kevin Bloody Wilson — Aussie Icon Tour is set to roll into The Opera House in September. He’ll perform a selection of his funniest songs, and irreverent stories, all infused with his wickedly rude sense of humour.
Meet the Ben Stevens & the Team
If you, or anyone you know, could benefit from a considered market assessment by Wellington’s only licensed agent and registered property valuer, please do not hesitate to call. We are always happy to help.
