Matthew Gilligan tells Economist Property is GOOD business

[donna]

Who better to have in your corner than Matthew Gilligan? In the Property vs Shares 'debate' Matthew is in the property corner and NZIER Economist Shamubeel Eaqub is in the shares corner.


Shamubeel says "Property is Bad Business"; Matthew says that's not true and in a comprehensive response presents analysis comparing the performance of Property vs Shares with equal initial investment.

Property is the clear winner (not that we needed to be told) and finally someone has stood up to the Economists who love to bash property!

Well done Matthew!

Read the article here

regards,

Donna

[Rosco]

When I first saw this article I thought, what about at 80% LVR.

I worked through the first example, and actually works out very similar to example provided, with $276,500 ownership over renting.

I then wondered, what about other areas with lower capital gain. So Hamilton figures with 80% LVR. Still worked out similar with $79,360 ownership over renting.

Ross

[lissie]

But seriously how much longer can Auckland keep growing at 7-9% PA? I know there is a supply-side issue - but there is little evidence that incomes are rising at anything like enough to keep houses (rental or purchased) affordable

[Davo36]

But seriously how much longer can Auckland keep growing at 7-9% PA? I know there is a supply-side issue - but there is little evidence that incomes are rising at anything like enough to keep houses (rental or purchased) affordable

The price of houses used to be related to NZ residents income levels. But they aren't anymore.

Because we have so many overseas buyers getting their ill gotten gains out of their dysfunctional countries over to ours, where it's handily cleaned and laundered via residential property - with the government's blessing.

[Rosco]

Over the last 20 years, REINZ median house sale price for whole NZ has gone up by 6.3% on average per year.

Auckland is expecting 1 million more people over the next 20 years. I would guess that with these numbers Auckland would outperform the rest of NZ. If there are that many people looking for houses, then that is likely to drive house prices up over the next 20 years!

Based on these figures do you think Auckland will grow 7-9%?

Ross

[klauster]

The winning answer is – it depends on! In my case I have done both and prefer properties as investment, which gives me control over input and output.

Situations like in AK are not sustainable for ever - as they say, what goes up must come done. The specific is NZ’s culture has been driven by properties. That has worked over decades locally but with entering the global market the impact is visible everywhere.

Another stupid thing is to divide societies in winners and losers. Of course people like it when overnight their house hit the million Dollar mark. And the opposite - people scratch their heads to obtain that sort of finance. Well, banks like it, too -selling instead of 200k loans lending 400k – even more profit.

And country’s statistics look even better – becoming a nation of QV millionaires – do you see any child poverty because of that? I miss an infrastructure that supports the balance in this country. The entire debate property vs stocks is rubbish.

[Bluekiwi]

Poeple have lost a lot of money over a squggly line.

At least with property you have some control over your investment.

[PTILoveYou]

At least with property, you get a cash return every week instead of a small dividend (fully taxed) from shares every 6-12 months.

[Damap]

It has always been laughable to compare real estate with other investments in my view. Not because other investments don;t work but with shares let's say there is so much speculation and change fuelled by non concrete things. Real estate is quite unique in that regard. Everything else, shares, gold, oil, almost everything can double or halve in value overnight in certain circumstances. Conversely housing is an essential part of everybody's life. It is therefore incomparable I reckon.

[PTILoveYou]

Conversely housing is an essential part of everybody's life. It is therefore incomparable I reckon.

Exactly, that's why so many prefer brick & mortar.

[flyernzl]

I judge by results.

My wife gained a reasonably substantial amount from the settlement of her first marriage.

She put one third of the money into Wilson & Horton shares - we both hope Tony O'Reilly enjoys life on his Lyford Cay estate.

She put one third of the money into Bridgecorp - we both hope that Mrs Petricevic really enjoyed riding around in her new Porsche.

(At my instigation) She put one third of the money into Auckland residential rental property - and she has now been able to retire from AUT and live quite well on that rental income.

And money market people continue to wonder why we don't trust them?

[Wayne]

She was really clever at divesifying.
My parents lost money in 1987 and still remember it.
I lost money and learnt!

[elguapo]

Over the last 20 years, REINZ median house sale price for whole NZ has gone up by 6.3% on average per year.

Auckland is expecting 1 million more people over the next 20 years. I would guess that with these numbers Auckland would outperform the rest of NZ. If there are that many people looking for houses, then that is likely to drive house prices up over the next 20 years!

Based on these figures do you think Auckland will grow 7-9%?

Ross

I remember very clearly exactly the same justification for house prices rising in Dublin at 15%.

[elguapo]

At least with property, you get a cash return every week instead of a small dividend (fully taxed) from shares every 6-12 months.

Small dividend? Many NZ and international share have yields double the yield of Auckland property. The taxation difference is simply because you need your 'cash' return to give to the bank....

[elguapo]

Conversely housing is an essential part of everybody's life. It is therefore incomparable I reckon.

So are electricity, energy, jobs, food, water etc. Doesn't that make them all comparable investments?