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Has Bollard Lost The Plot?

Brian Dalley
Brian Dalley
Alan Bollard

Watching a late night News Broadcast I wasn’t sure if I was hearing things as it had been a long day. But when Bernard Hickey made a statement something like “here we go again” as he was looking at the ground in horror, I thought out loud, what are these so called experts going on about. He was referring to the sudden surge in property sales.

Bollard was reported as saying New Zealanders have an unhealthy fixation with home ownership and property investment.

Was he saying we should only purchase one house in a life time and not upgrade if we want something nicer or bigger? If so then why not come out and say keep the same TV, mobile phones, cars and boats.  The report went on to say that it was businesses that needed cash injections not the housing industry as job creation was needed which in turn would generate more revenue and in turn would stimulate the economy. Little wonder the R word is still being bandied about. Interesting I thought, now it has two meanings [ Recession ] and [ Recovery  ] I did see the funny side of that as some are still unsure which one they should apply to what.

I would like to put this to Dr Bollard; housing is the largest employer in New Zealand by far. Sure not the biggest export earner but employer yes, however one must think outside the square to fully understand the magnitude of what I just said.

Most people when they think housing think builders so let’s start there, the builder arrives at work in a vehicle which someone sold to them, runs on tyres and needs maintaining, inside will be a radio, a phone, something to drink, something to eat,  a dog on the back, that also eats, he has tools, wears clothes and of course has a hammer. All of these things don’t mystically appear. Much the same as a plumber, drain layer, carpet layer, painter. Then when completed a family moves in and yes more people are employed to do things for them, I think you get the picture. So why then are shots always fired at the housing industry?  The singe largest employer in the country.

Is it because the building industry isn’t export focussed? Maybe we should be exporting pre-fabricated houses rather than timber, maybe we are.

As for trying to warn people off from investing in rental property, come on. Some politicians are doing just that at our expense and also, Housing New Zealand has pulled back on building in favour of leasing from private investors. Also, market prices are low, interest rates are low, and more people are looking for rental accommodation so now is a good time to invest in property. Sure a more rational approach is needed towards debt reduction but that is not to say that both can’t go hand in hand.

On the other side of the coin, should you invest in the share market, how long would it be before you could expect a reasonable return?  Don’t ask me as I already have too much worthless paper.

As to Bernard Hickey’s statement based on statistical information rather than grass roots knowledge, there was always going to come a time when a sudden surge would take place and the reason for that is quite simple.

The Reserve Bank set out to achieve just that by lowering, and lowering, and lowering the OCR. So the resurge was inevitable and is this time, being better managed by more stringent credit lending policies although there is still work to be done in this area.  A leaf needs to be taken from Bollards book as it’s time for lending criteria to be relaxed a little.

So should we be concerned about the [recession] or celebrating what looks to be the start of a [recovery].

My advice | same as it has been for the past seventeen years, If you can afford to do it, DO IT!

Brian Dalley is a leading Property Consultant | former NZMBA Mortgage Broker, and Real Estate Agent.

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