The social shaming of property investors by politicians is one reason ordinary Kiwis are nervous about investing.
Prominent Wellington 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 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 in the future.”
Goodey says that what amounts to public shaming of property investors–most of them 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 equity structures 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 them are children.
“The problem isn’t 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:
- Don’t follow the herd
“Current conditions are ideal for property investment because you can buy at the bottom of the market. People only act when the prices increase, but there’s no profit in a stampede.”
- 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.”
- 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 flats or car parks. The way things are going may make it necessary to be able to extract more return from any one property.”
- 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 fiscal resilience.
“Fiscal resilience is your salary, plus an investment portfolio,” says Goodey.
