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Philip Macalister
Philip Macalister
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Key on property investors' menu too?

Friday 14th of May 2010
Some numbers from Treasury this week show how important housing is to our overall wealth, and why it would be foolish for the government to make too many changes to property investment tax rules next week.

Treasury released its estimates of household assets and liabilities. It showed that houses make up nearly three quarters (74%) of our total gross assets. The actual number is $603 billion verses the $212 billion we have in financial assets (shares, KiwiSaver, deposits etc).

Yes there should be some encouragement to shift the balance so more of our wealth is held in financial assets, but it should be done on a softly, softly basis rather than by using shock tactics.

Plenty of New Zealanders are wary of financial markets and you can’t blame them when you see what has happened to share and bond markets in recent years.

We have seen government’s wipe millions off dollars of savings off New Zealanders before. One of the more recent examples is when the Labour government changed the rules in the telco market and destroyed massive value for Telecom shareholders.

Next week’s budget shouldn’t be National’s version of what not to do to people’s savings.

If it is then Prime Minister John Key could well end up on the menu at the property investors conference.

Housing is an important source of wealth not just in New Zealand, but also across the Tasman. Australia is often heralded as being a nation of sharemarket investors and a country where people own many financial assets because of its compulsory superannuation scheme.

However it still has the majority of its wealth in houses. Figures show that 59%of their wealth is in bricks and mortar, as opposed to our 74%.
Comments (7)
Linda Bridges
John should send those affordability figures to the to Mary Holm at the Herald she obviously hasn't seen them. Housing in NZ is very afordable unless you want to live close to the CBD in Auckland or Wellington and that is the same re CBD areas in most countries. <br />Some young house buyers in NZ need to take their first home aspirations to the outer suburbs, the same as all the generations before them had to do.
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14 years ago
Graham Chester
The property prices have been to high for too long. Without ongoing increases in property value it is difficult to justify buying rental property at the current low rental returns. <br /> <br />The price of land in artifically inflated by the councils trying to contain the city boundaries. We are in a country of 4m people. There is plenty of land and it shouldn't be so expensive.
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14 years ago
Warren Payne
The only impact JK's property tax changes will have is to put rents up for the 37% of people who rent their accommodation. ie higher costs to own a rental = less rentals available = higher rents its economics 101. <br /> <br />Over the medium term it will have no impact on house prices sure prices of investor properties might dip as a few overstressed landlords rationalise in the short term but that doesn't change the fact that we have not been building enough properties to house the population for 2 years now. In the medium term not enough properties to house the population = higher prices, again economics 101. <br /> <br />Hang in their guys, there's good reason you invest in property, its the same reason that the banks will lend you money to buy your renters but not to speculate on the share market.
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14 years ago
Penny Darwin
Fewer rentals means more home owners and fewer renters so rents should remain the same.
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14 years ago
Joy KEIGHLEY
Totally agree with Debbie, there are some tenants that really try your patience then you get a really good one that restores your faith so you keep on keeping on.
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14 years ago
ALEC TOD
When the government changes the rules as to claiming depreciation - they change the basic economic rationale of investing in property. In which case they must allow those investors who bought property having factored in depreciation to sell property without expecting a claw back of previously claimed depreciation. <br />If they move the goal posts they are in for a fight from landlords who want to get out because of this change - and get out without penalty.
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14 years ago
Rod Philson
Having spent the day reworking figures I have concluded that the owner of a brand new $500k investment property,who uses a chattels valuation, and who offsets losses over 10 yrs against an income of approx $100k, will pay on average an additional $50.00 per week to own his investment property. <br />A contribution of $80k over ten years to earn approx $200k tax free capital gain (Based on an average 5%pa capital Growth) is a great investment. <br />NB the national average for the last 30yrs is 7% which would equate to $420k tax free capital gain = even better. <br />Remember its the return OF your money that counts, not the return ON it. <br />Congratulations to John Key &amp; Bill English for a revamp that will see most people continue to invest in bricks and mortar, rather than the risky sharemarket or finance company term deposit.
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14 years ago
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