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Who owns property and does it matter
NZ is a country where the small people invest in property for safe investment reasons, more than anything else. In other countries such as the UK, its councils and other institutions that buy property to rent out to the masses. The question I raise is, does it matter who owns, or rents over the property sector. If a person rents rather than buy, then I would sugest that that person is not inclined to be an investor in the first place. I would also suggest that the landlord of the property would be more inclined otherwise to invest in business ventures. I would go down the track further and suggest that encouraging property investment is a good thing rather than a bad thing for the masses of financial illiterates who otherwise would blow their savings. This might appear condescending but true non the less. I think NZ is fortunate that people look at owning property as a measure of success. Stop and think about it guys property ownership should be encouraged not condemned. Macdunk
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I rent so I'm a failure......:o
Sold up a year and a half ago in Queenstown and moved to the garden city. Invested the money in a retirement village, oil and coal seam methane........will not be buying back in for another couple of years.
Buy a house for $450k or rent it for $400 per week.....
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Hi Macca,
Two things stand out for me.
My home, rightly or wrongly is a security blanket. I find comfort in the fact I own it.
I have made good money from real estate. By far my best investments ever. Perhaps not the best anual return but certainly effort required to achieve the result was minimal when compared to other things like the share market and it is one of the few places I have felt safe using leverage.
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Member
The reason most people do well in property long term is because of leverage.
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Originally Posted by voltage
The reason most people do well in property long term is because of leverage.
Yup. No debate there Voltage. Add to that that a large chunk of the expence is money that would otherwize be spent on rent ( 1st property owner occupier )
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Member
Excellent post Macdunk. There is a lot of snobbery around over property - you know - only the great unwashed invest in it.
Property is the usually the only way Mr and Mrs Joe Average accumulate assets.
I for one am delighted the property permabears have been proven wrong.
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Originally Posted by duncan macgregor
If a person rents rather than buy, then I would sugest that that person is not inclined to be an investor in the first place.
On the whole I'm incliend to agree. But renting is a perfectly acceptable option providing the renter has made a decision that putting there cash somewhere else will get a better return further down the track.
I haven't been a renter for a whiel - last time was when I sold up before buying the next place which I didn't know where at the time. Being a cashed up renter / buyer was a good place to be!
Actually, in hindsight "return" might not be the best word. But what I reckon is that a person needs as many assets behind them as possible at retirement age and should certainly be building net assets before then. Therefore property investment and home ownership are perfectly acceptable forms for placing your cash.
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I would be inclined to think that the people who rent all their lives a high percentage become a burden on the community in later life. I know very few successfull people who dont own property of one type or another. Exception to every rule, some people have jobs that make it difficult to own property. The unfortunate ones get a house provided by their employer, giving them the opportunity to live a higher life style than would normally be the case. Human nature being the way it is, most people live a life style close to their incoming income. NZanders on average according to what i read have only enough savings to last only one month if their income stops. That is a sad stastistic
The Govt in the past has always encouraged home ownership with state advances cheap loans, plus advanced payment of family benefits for a deposit etc etc. This got people on their feet to prosperity getting them away from the state house bludge of the govt thinking. Its a wonder they never continued. I think the downtrend in thinking started when banks took over with fluctuating mortgage rates for much shorter terms. People are left thinking the rate might go up to an unaffordable level.
Some one has to own the house you live in, be it the landlord, the council, the Govt,or yourself. The cheapest and best owner is your self as far as the country and tax system goes. Its an asset that increases in value over time, plus a source of cheaper loans in business. Macdunk
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I recall seening interviews with several couples before the GFC who decided that they were better off renting, and channel the funds that would otherwise go on mortgage repayments into the stockmarket.
I hope that had some put options in place or traded out of their positions before the downturn took hold.....
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Member
Good point HC
I have to be honest and say that if my better half had not convinced
me to buy a little house a couple of yrs ago and we were stil renting,
that I probably would have lost all spare cash in 2008 and have to start
again - again.
Duncan makes another good point, about financial illiteracy, if you
don't know what you are doing that property is the safest investment for most.
But that raises another point - if you do know what you are doing you can invest
in anything apart from property - shares, gold, horses, sports, art etc. etc.
George
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