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Brent Sheather: Safe as houses?
By Brent Sheather
9:30 AM Wednesday Jun 13, 2012
Picture / Geoff Sloan
You can't be certain about many things these days - death and taxes of course - and you could probably add to that the prospect of getting a flurry of furious replies from enraged property investors if you write an article impugning the investment merit of residential property. Gareth Morgan did just that the other day and when I last looked there had been 178 comments on the Herald website which is surely some sort of record.
A good majority of these are not happy with some respondents blaming a mistrust of the stockmarket as leaving housing as one of the least bad options. But what the heck, I thought I would have a go anyway.
Last month an interesting new book was published in the UK, written by Neil Monnery. Mr Monnery is a graduate of both Oxford and Harvard Universities and worked for one of the world's most prestigious management consultants, The Boston Consulting Group.
The book is entitled "Safe as Houses" but the author's conclusion is that residential investment is anything but safe. Mr Monnery is clearly worried about the housing market and he takes a close look at what he considers are three of the major misconceptions about housing investment. These misconceptions are that:
• House prices go up over the medium and long term
• Dips are an opportunity to get into the market because they are relatively brief
• Prices grow well ahead of the rate of inflation making houses a very good investment.
Mr Monnery argues that these beliefs are widely held because they reflect the experience of the housing market that most of us have had over our lifetimes. He has spent a great deal of effort getting very long term historical data on residential property prices in the US, the UK, various European countries and Australia including a 400 year history of house prices in Holland.
First up however he looks at the popular phrase "safe as houses". Mr Monnery says that "as safe as houses" entered the lexicon in the late 1860s at about the time that shares in railway companies crashed in the UK. Whilst it is now held to mean that owning property is attractive other people argue that the original saying actually referred to physical safety and was derived from a family of phrases that started in the 1600s with such well known sayings like "as safe as a mouse in a mill" then moved on to "is safe as a crow in a gutter" before finally reaching "as safe as houses".
More in the Granny at
By Brent Sheather
9:30 AM Wednesday Jun 13, 2012
Picture / Geoff Sloan
You can't be certain about many things these days - death and taxes of course - and you could probably add to that the prospect of getting a flurry of furious replies from enraged property investors if you write an article impugning the investment merit of residential property. Gareth Morgan did just that the other day and when I last looked there had been 178 comments on the Herald website which is surely some sort of record.
A good majority of these are not happy with some respondents blaming a mistrust of the stockmarket as leaving housing as one of the least bad options. But what the heck, I thought I would have a go anyway.
Last month an interesting new book was published in the UK, written by Neil Monnery. Mr Monnery is a graduate of both Oxford and Harvard Universities and worked for one of the world's most prestigious management consultants, The Boston Consulting Group.
The book is entitled "Safe as Houses" but the author's conclusion is that residential investment is anything but safe. Mr Monnery is clearly worried about the housing market and he takes a close look at what he considers are three of the major misconceptions about housing investment. These misconceptions are that:
• House prices go up over the medium and long term
• Dips are an opportunity to get into the market because they are relatively brief
• Prices grow well ahead of the rate of inflation making houses a very good investment.
Mr Monnery argues that these beliefs are widely held because they reflect the experience of the housing market that most of us have had over our lifetimes. He has spent a great deal of effort getting very long term historical data on residential property prices in the US, the UK, various European countries and Australia including a 400 year history of house prices in Holland.
First up however he looks at the popular phrase "safe as houses". Mr Monnery says that "as safe as houses" entered the lexicon in the late 1860s at about the time that shares in railway companies crashed in the UK. Whilst it is now held to mean that owning property is attractive other people argue that the original saying actually referred to physical safety and was derived from a family of phrases that started in the 1600s with such well known sayings like "as safe as a mouse in a mill" then moved on to "is safe as a crow in a gutter" before finally reaching "as safe as houses".
More in the Granny at
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