Opinion

[OPINION] Social stigma scaring off mom-and-pop investors

The social shaming of property investors by politicians is one reason ordinary Kiwis are nervous about investing.

Wednesday, July 26th 2023

Prominent New Zealand Property Coach Steve Goodey says two critical pillars of the New Zealand economy are farming and property investment—food and housing—and both are under attack by politicians such as the Labour/Greens.

"Politicians and activists are using the power of envy to shape public opinion and to leverage votes, without thinking through the long-term consequences for middle-income Kiwis who are too cowed by the current environment to invest to secure their future."

Goodey says that what amounts to public shaming of property investors—most of them single investment owning, hard-working Kiwis—and the almost punitive-like legislation they have to bear creates a social environment that makes people nervous about how they may be perceived.

"The current conditions, with pressure on property prices, is the ideal time to enter the investment market. However, social pressures (in addition to factors like interest rates) are costing people opportunities. 

"Proposing a rent cap, for example, is like telling plumbers that they can only add a three per cent margin on their work. Government intervention, non-deductibility, re-writing tax rules and ring fencing may win votes, but they can only cause further housing shortages and suffering. Developers are building less because the current government makes it hard for them."

Goodey said there has been a 200 per cent explosion in people trying to get into emergency housing, and 4,000 of those are children.

"The problem isn’t only rents; it's supply. More housing makes renting and buying more affordable for most New Zealanders, but at the moment, there are some parts of the country where it is almost impossible to rent a property."

Goodey says that property is a user-pays system. What is more expensive for landlords is more expensive for tenants. He offers the following advice to Kiwis who want to secure their financial future:

1. Don't follow the herd

"Current conditions are ideal for property investment because you can buy at or near the bottom of the market. Most people only act when the prices increase, but there's often less profit in a stampede."

2. Ignore the politicians

Goodey says Kiwis need to stop worrying about what politicians and neighbours might think because the neighbours will not be funding their retirement.

"Don't believe the hype or the criticisms or listen to the activists. Let the numbers speak for themselves."

3. Not your average house

"My advice to those thinking of investing is to look beyond your average three-bedroom home to properties that may offer more, like boarding houses, blocks of well-located and cash flowing new developments. The way things are going may make it necessary to be able to extract more return from any one property."

4. Plan ahead

Goodey says those contemplating property investment should determine where the property market will go in the next two or three years after this year's General Election as a means to developing personal financial resilience. 

"Financial resilience is your salary, plus a cash flowing investment portfolio," says Goodey.

Comments

On Monday, August 28th 2023 11:26 pm Eric Short said:

NZ, the most unaffordable property market in the world. Although I own investment property we clearly need government and Councils to change planning rules to bring prices down to world prices to average income levels. Our children on good incomes can't get what they want. More property, lower prices, possibly even rent caps as Germany has just adopted.

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