By Glenn Morris
I have my normal writers block before urgency has forced me to the key board. The general idea about what to comment on is the above heading of a sermon Tony Barnett gave many years ago. Then I read the latest NZP magazine and discovered they have the same thoughts. Here we are in the middle of winter, with snow unusually on the Grampians and more properties to let than I have had for ages. Some real estate sales people tell me that residential property investors are conspicuous by their absence in the market.
The National government ministers are still chanting the mantra that they think too many people have been investing in property and think more people should be investing in productive industries. Goodness knows what particular industries they have in mind. Are they thinking of the big F’s of fishing, farming or forestry? Those of us who dabble in the share market know it is not a bed of roses at the moment.
Then just when it can not get much colder and miserable, I poke my head out from under the blankets to discover we have a general election looming and the Labour party announce their policy of a capital gains tax on all investment property sales and capital gains on shares sales too. I did not even bother to read what the Labour hopefuls had in mind doing this. They obviously want to lower investment in both housing and industry. Perhaps they want to encourage more spending in social housing and welfare?
Has Labour not heard the saying when in a hole the first thing you do is stop digging? Not that I, nor lots of other Kiwis, think that Labour has much chance of getting into power but surprisingly the media has given their ideas lots of exposure and some of the ideas have stuck firmly in the minds of many people.
All these stinking thoughts are influencing what good decent hard working people like you and me are doing. Here we are in a trough between housing price peaks. The number of new home starts is at an all time low, meaning the supply of competing rentals is down. Immigration surprisingly is still in our favour which means the demand should be tracking up. The Christchurch earthquake has taken out thousands of dwellings and a significant number of people have moved to Nelson with more to follow. Interest rates are at an all time low and have been down for a longer period than I can ever recall. A gradual tsunami of rent increases is swirling in a muddy stream out of Auckland and I guess this will spread out into the other growth areas of the country when the conditions are right. Goodness gracious the fundamentals all point to good times yet we are still stuck down here in the mire. What is going on?
My theory is the bulk of residential investors do not buy when the numbers stack up.
They buy when the feel good factors are there. They look for those little yellow fluffy ducks to see if they are all lined up. With a bit of luck, lots of you have completed the annual ANZ NZPIF survey of property investors. This survey will no doubt repeat the findings of many earlier surveys. That is those investors owning one or two residential rental properties make up the vast majority of investors. Those owning more than five rapidly recede and those owning over ten are like white bait when I go fishing.
I and other writers keep telling investors do your sums before buying but almost no one ever listens. People want to listen to good real estate sales persons telling them such and such a property will make a great investment. “There is always plenty of demand for family homes in Stoke. You will never lose money if you buy my hot listing right now. If you invest in local Bad Street where the returns are higher you will have all sorts of troubles. Only buy there at your peril.”
Sure some beginners know better, buy their one or two in bad alley then quickly sell off when the experience is none to wonderful. Rarely does one hear in the media about lovely old investors helping out young families by housing them. Who cares if Glenn spends his weekends and every bit of time between Sundays fixing blocked drains, delivering old beds to the down and out, and picking up rubbish departing tenants have left behind. Such actions must surely be related to making more money and have nothing to do with helping people.
There is no widespread appreciation of what landlords do. Sure the socialists, when they get into power, think that civil servants are the best people to be landlords. Have you ever heard of a tenant saying their civil servant landlord is far more considerate and caring than their old private landlord? With the ongoing news releases from the current Minister of Housing continually patting himself on the back I am yet to read any good positive news about private landlords housing someone that others would not help. Well I can tell you just because politicians and economists do not place value on what we do many tenants have other thoughts. There are few investments in the world more worthy than residential homes. Children grow up in them, old people cherish their homes and young people make love in them. These things far out-class offices that are full of accountants and commodity traders. Who on earth lovingly cares for their industrial workshop?
No folks, as usual the people in power in Wellington have stinking thinking. I am pulling my warm hat on and heading off into my own world where I can do some good for others in spite of what others think.
I will do my own thinking. I smell roses when others smell rubbish.
Glenn Morris is the owner of Nelson property management company, “Glenn’s Vacancies”, managing residential and commercial investments. He is the current secretary of the Nelson Property Investors Association. He was active in the review of the RTA and is a well-known figure in the property investment community. He has a reputation for effectively managing difficult tenancies.”
