Another boost to property love affair

You can understand why New Zealanders love an asset they can touch, feel and see.

Especially when we read stories about Ponzi schemes such as the one run by Ross Asset Management.

It is incredible that 900 people can be ripped off to the tune of more than $400 million.

What is even more amazing about the sorry Ross saga is that no one in a village-like city such as Wellington knew about it.

There is also a little irony that the Financial Markets Authority offices were opposite the Ross Asset Management offices, and a few hundred metres down the road.

It would be pretty damn hard to manage this magnitude of fraud with so few people in property. (Some readers may say that finance companies managed this.)

Our attitude to property is a bit like the stories and life cycle of the humble pukeko.

Apparently pukeko have one partner and mate with them for life in an enduring relationship which can't be broken. This story is a little hard to prove but maybe the Maori myth about how the kiwi lost its wings is more appropriate.

The pukeko was one of several forest birds that were asked to come down from the trees to eat the bugs on the ground and save the forest.

All the birds, except the kiwi, gave excuses as to why they couldn't do it.

The pukeko's excuse was that it looked too damp down there and he did not want to get his feet wet.

So the pukeko was punished for refusal and sent off to live in the swamps forever.

New Zealanders are being urged to stop investing in real estate. Instead they are being asked to invest in "productive" assets or the country will be punished economically.

It's a myth and is unlikely to happen.

Investing in property is one of those things that will take generations to change. It's a behavioral change, like the anti-smoking and drink-driving messages.

People will change but others will continue to do it.

Comments from our readers

On 27 November 2012 at 12:44 pm Miles said:

Assuming it is correct that 80% of buyers on North shore $1m to $4m properties are flown in, bussed in Asian buyers, what if they stop coming?

On 27 November 2012 at 1:30 pm Reg Gunn said:

Hi - Rental property is an investment as it generates income,an owner occupied property isn't as it is a roof over your head which you need.And it is expensive when you factor in interest rates,maintenance,insurance, council rates etc.People only look at what they pay and what they sell for, then avoid those costs! Interest alone over the term can double the purchase price! What property is however is an inflation hedge.This gives some protection to the home owner, but I'm sure they don't calculate this in.Even at 2% inflation it will around halve your money in 35 years (approx).

Cheers.

Another boost to property love affair

I've been thinking about New Zealanders and our love affair with property. It is a bond that will never end - well, not in my lifetime anyway.

Tuesday, November 27th 2012, 12:00AM 2 Comments

Comments from our readers

www.GoodReturns.co.nz