Many years ago, when I was a young elected councillor on the Napier City Council, I attended an event where the council was explaining an impending rates increase to a group of ratepayers. Frankly, I don’t remember the details of the increase – but I do remember that it wasn’t popular – and I vividly recall, at the end of the formal part of the meeting, being set upon by a particularly angry elderly ratepayer who was determined to have a piece of me. Red faced and eyes blazing she waved her index finger in my face and exclaimed: "It’s all very well for you with your wealthy, privileged background and your university education, but some of us struggle to make ends meet!”
I understood her frustration – but her assumptions about me were way off. My formal education never progressed beyond School Certificate at Tamatea High School and while I had a great childhood, I started my journey as part of a blue collar left-leaning big family in a state house in Marewa, Napier – about as far from "privilege" as it was possible to get in those days.
Almost 30 years have passed since that meeting and the woman who confronted me has probably long since passed away but the practice of making assumptions about where people have come from is still very much alive and well. Sadly, the idea that those who are successful have always had some form of "advantage" also drives an enormous amount of unwarranted envy.
Most recently, we saw this in the now thankfully abandoned proposal to hit property investors with a capital gains tax, a proposal which speaks volumes about the assumptions that some people make about those who invest in property.
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So let’s look at some of those assumptions and expose them for the myths that they are:
1, People who invest in property come from wealth.
While there’s no doubt that the wealthy do invest in property, coming from wealth is by no means a prerequisite for getting started. That’s not to say that property investors don’t become wealthy, over time, but that’s as a result of their efforts, not the basis of them.
2. People who invest in property are from high-income households.
Wrong. The vast majority of property investors, in this country, are waged or salaried Kiwis who’ve kicked off from the same starting blocks as most of the rest of us. As an aside, I bought my first investment property – a block of flats in Napier – when I barely had two coins to rub together. Yes, the LVR deposit rules have definitely made things more difficult, but there are still plenty of opportunities to get into the market without the need for a massive income.
3. People who invest in property are well educated.
Lots of educated Kiwis invest in property, but again, that isn’t the basis of their success – and many thousands of others invest in the market without the benefit of having any form of formal education.
4. People who invest in property need an advanced knowledge of the property market.
While it’s true that investors need to develop a good working knowledge of how the property market works, this is no more difficult than understanding the rules underlying a game of footy. The numbers which tell us whether a property is a good or a bad investment come down to understanding the difference between capital growth and cashflow and can be mastered by anyone.
5. People who invest in property are risk takers.
While no form of investment is completely without risk, property is very much at the lower end of that scale – which is why hundreds of thousands of Kiwis are involved in it.
Success – in property or anything else – is about mindset, not advantage. You can be someone who seeks to diminish those who have worked to improve their lot – or you can aspire to be one them. I know who I prefer to spend my time with.
- Ashley Church is the former CEO of the Property Institute of New Zealand and is now a property commentator for Oneroof.co.nz. Email him at [email protected]
