Calling Out Vilification
Recent media coverage of a property investors’ event shows that misinformation about investors continues to be peddled – even though the truth is very different.
1 July 2019
Fevered anti-property investor emotions have been a prominent feature of this property cycle. At the peak of the market, investors were vilified as responsible for the sky-rocketing house prices which were keeping first home buyers out of the market. They were also widely maligned as slum landlords forcing tenants to live in unhealthy, overpriced properties.
Despite the best efforts of investor advocates to rebut them – as well as the market slowdown – it appears these investor-hostile perceptions remain firmly in vogue. A recent NZ Herald report on the GRA Property Leader’s Event at the end of May is a striking example of this.
The article covered the event in a determinedly negative fashion. Its intent seemed to be to present investors as money-grubbing and out to exploit tenants. It was disparaging about presenters and audience alike, and relied on a host of old, inaccurate stereotypes and misperceptions.
One of these stereotypes is that all investors own multiple rental properties and are raking in vast amounts of cash.
That is simply not true: most investors are ordinary people who own one or two investment properties that they have scrimped and saved for. Many see very limited, if any, cash flow from their properties.
Another is that all investors spend their time buying and flipping properties tax-free and at the expense of other participants in the market. In reality, most investors buy and hold their properties with the aim of boosting their retirement incomes when they do sell.
Further, for many years, the percentage of properties flipped nationwide has sat around 3%. In Auckland, at the height of the cycle, about 5% of properties were being flipped, but that has dropped off now. Whatever the case, trading property is a valid investment strategy, which is taxed and which serves to improve housing stock.
To put it simply, most investors are small-scale and trying to build up a nestegg for their retirement, or to pass on to their children. Most try to do their best by their tenants. And, to that end, the antagonism towards investors baffles me.
It is made even more confusing by the fact that when you talk to people about their financial plans, nearly all of them say they would invest in property. I have met very few people in person who clearly have no interest in doing so.
That suggests most people have quite a different take on property investment when it comes to their own future. It also suggests that genuine anti-landlord sentiment is less widespread than we are told.
As it happens, I also attended the GRA event but my impressions were somewhat different. Around 500 people were in the audience and there was far more diversity than you usually see at conferences.
This suggests that people aren’t turning away from property. It also illustrates that many have an interest in property investment and want to learn more about it. Our goal is to help with that and, as ever, hope this issue serves to educate and inform those keen to learn.