House equity

“Double your money” real estate pitches are still circulating

Real estate prices are falling after decades of big returns for investors – and real estate stories and advertisements have also been very profitable for the media in this era. Recent warnings that ‘one-sided betting’ on property could be a thing of the past have grabbed the headlines – but property investors in the media are still saying it’s safe as houses.

house prices – and earnings for investors – in the New Zealand Listener.”/>

Reserve Bank economist Paul Conway argues for a slowdown in house prices – and earnings for investors – in the New Zealand Listener.

Real estate diving? Why housing is no longer a one-sided bet,” reads the bold banner on the front page of the latest New Zealand Auditoraccompanied by a pair of ruby ​​red dice.

It was a teaser for an inside piece by Paul Conway, the Reserve Bank/Te Pūtea Matua Chief Economist. The Bank has predicted housing market corrections before — and was wrong — but in this rewrite of his speech at the recent National Homeownership Conference, Conway argued that the dynamics of the housing market are changing.

Auditors’ editor Karyn Scherer pointed out that the real estate industry‘s own statistics already indicated an 8% price drop from November 2021. BusinessDesk data reporter Andy Fyers showed this week that ” markets with the highest prices at the market high saw the biggest declines.”

“This underscores how much affordability, given higher interest rates, seems to drive prices down,” he concluded.

This week BusinessDesk’s cook the books podcast asked “Is the housing market really about to collapse?”

Infometrics economist and media friend Brad Olsen said one shouldn’t bet on past real estate earnings going forward.

But the property sections of the media paint a different picture.

NZME, owner of BusinessDesk and the New Zealand Herald, also has a separate online platform devoted to news and real estate listings alongside advertisements – A roof.

His real estate trade stories also appear alongside those of the Herald on the Herald’s own website.

In a recent article titled Double your money One Roof, real estate columnist Ashley Church – a professional real estate investor – analyzed median house price figures up to 1990 to see if the so-called “ten-year rule” – this New Zealand property doubling in value every decade – was really true.

“The ‘doubling of property prices’ that some property commentators are talking about can now be empirically proven,” he concluded.

The numbers aren’t always 100% exactly, he said, but if you pick two dates ten years apart, they were usually not far off his sums.

But what about ten years after today’s uncertain times?

“In my view, this trend is going to continue and when we look back at house price growth in 2030, we see that house prices are still doubling but it’s taking even longer – maybe 14 to 15 – for that to happen,” Ashley Church told One Roof.

Two other experts told One Roof that another doubling was uncertain. One said that even if your property doubles by 2032, all the equity will go straight into another if you need a place to live.

Along with BusinessDesk and One Roof, NZME owns the Newstalk ZB radio network which broadcasts the One Roof property hour every Saturday and Sunday.

Ashley Church is the guest on Sunday and last weekend he told listeners there was nothing to be nervous about.

He pointed out that big economic shocks – like the GFC, the 1987 crash and Covid – have all disrupted the pattern over the past 40 years, but there was no such reluctance from another investor. high profile professional real estate advertising during the show.

“Property in New Zealand has doubled every 10 years, so buying an investment property today could earn you a significant tax-free profit over the next five to 10 years,” says Nikki Connors of the company Propellor Property, which presents itself as “the Queen of Kiwi property”.

“It can help you pay off your mortgage and give you money for the future. You can start by using a small portion of your home equity to secure the deposit on a new property and, of course, to work with the experts. Why haven’t you called us yet? she asks listeners in the ad.

Those holding back might not be convinced by “the ten-year rule” at uncertain times like these. But they may have seen recent reports that IRD filed a claim last month to liquidate Propellor Property – and later two other partners.

Connors told Stuff it was “heavy and said in a statement that all outstanding taxes will be settled by mid-July.

And, like other businesses, she said hers had been “impacted by the pandemic.”

But property prices had soared during the pandemic, only falling back recently.

No one could be sure this would happen when Covid hit in early 2020.

But Nikki Connors was confident in an NBR interview in May this year.

“Ownership has doubled every 10 years through four cycles over 40 years. There will always be something we didn’t expect – and it was a pandemic this time. But in New Zealand we have this huge demand,” she said.

IRD’s winding up claim is due to be heard in the Christchurch High Court within a month.

A recent One Roof article on real estate seminars that sell people the idea of ​​investing noted that Nikki Connors still runs them.

The people who get the message that property is still as safe as homes are crucial for real estate investment firms – and part of the media benefits from that too.