COMMENT: As a kid growing up in a poor family in Hawke’s Bay in the 1970s my aspiration certainly wasn’t to be a property investor. It was to be a journalist…. or maybe a lawyer. The former will bring a smirk to the face of those who endure my grammatically challenged weekly rantings, and the latter probably won’t surprise many. But I ended up becoming neither.
Instead, as a 14 or 15-year-old kid, I read Jones on Property in the late 1970s and I was hooked. This book, which is now a classic, was written by the great Sir Robert (Bob) Jones and it introduced me to terms such as “positive gearing” and “capital growth” – ideas which seemed like magic at the time because they showed how owning several homes wasn’t actually much more difficult than owning just one, and how, by applying a bit of simple math, anyone could dramatically improve their own position.
By the mid-1980s, and still in my early 20s, I was living evidence of Jones’s words, having built up a portfolio of eight rental units, which I then sold a couple of years later for no other reason than that I was young and stupid and not nearly as savvy as I thought I was at the time.
I didn’t get back into property investment until the early the 2000s but, in the almost 20 years since, property has been very good to me and my family. It has given me choices and opportunities that my 1970s state house self couldn’t have dreamed of, provided my wife and I with a level of comfort and, inexplicably, given me a platform through which to talk about property and other social, philosophical and political issues which matter to me.
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My point? That, when I talk about property and the property market, I’m drawing from personal experience and observations which go back almost 40 years during which time I have repeatedly practiced what I preach and had my own skin in the game. I don’t come from privilege, and no one helped me to get started (other than the words of Jones, through his books) so my words carry with them the scars and bruises of cold, hard, experience.
Ashley Church: “Property has been very good to me and my family.” Photo / Ted Baghurst
That isn’t to demean the opinions of other commentators but simply to reflect that real life doesn’t always follow the theoretical models of economic ideology or the opinions of tenured, salaried, university lecturers. This is why my predictions and opinions on the property market, and what will happen to it, are usually accurate – even though they’re often at odds with mainstream market commentary.
So why am I telling you this? Because right now – yet again – you’re being told that the property market is in strife with predictions ranging from warnings of ‘a correction’ through to a full market collapse. As is usually the case, these predictions are coming, not from analysis of a long-term trend, but on the back of three or four slow months, following, in this instance, the strongest period of capital growth in our recent history. And, as is always the case, the more pessimistic of these predictions will be wrong. Completely wrong.
That’s not to say that the market might not come back a few percentage points in some parts of the country – just as it did immediately following the GFC – but even in those cases the effect will be neither severe, nor lasting, and the market will ultimately continue its upward trajectory over the next few years.
Having been an active participant in the property market for much of the past four decades I’m as confident as I’ve ever been about the behaviour and direction of that market and while I’m taking a sensible approach to current events and developments I’m not seeing anything that should cause me (or you) undue concern.
Higher interest rates will certainly dampen price pressure for a while – but, as has been the case in the past, buyers will adapt to the new normal a lot more quickly than we give them credit for; the misguided CCCFA rules have already been reviewed and (as I predicted in January) lending will be back to near normal levels within two or three months; and while things are a bit tougher for first home buyers, right now, they will continue to be major players in the market, just as they have been for the past 40 years.
If my 40 years of experience has taught me anything, it’s that the market will ultimately find its own equilibrium and that, despite the hand-wringing of the various experts who have come and gone, its general direction is up, and it always lives to fight another day.
- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]
