March 15, 2025 • 41 mins
New data from CoreLogic shows we're at the best level of property affordability since before Covid.
While rent costs are waiting to catch up, the difference between mortgages and annual salaries is closing in.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talks.
Speaker 2 (00:11):
Songle and Narvib Songle. You're just slam Avig Songle and
b I Mavib song and.
Speaker 3 (00:37):
Yes, welcome back to the Weekend Collective. I'm Tim Beverage.
And by the way, if you've missed our panel with
carmc Donald Wilhelmina Shrimpton, you can go and check it
out on podcast for the Weekend Collective on iHeartRadio would
be a good starting point, or the News all the
News Talks, it'd be website. So yeah, but now it
is time for the one Roof radio show with what
your calls and text eight hundred and eighty and eighty
(01:01):
and text nine two nine two member. There's a small
charge for the there as well, and we're gonna have
a dig into just what your expectation is over the
housing market over the next thirty years, based on a
piece that was written by Tony Alexander where he bravely
max a prediction on what he thinks the average rate
(01:21):
of growth will be and I think this conclusion was
around six percent. But also housing affordability, because right now
new data from core Logic shows that we're at the
best level of property affordability since before COVID and joining
us to discuss that. He is an independent commentator. Of
course you know him as a property commentator on this show, and.
Speaker 4 (01:41):
His name is Ashley Church Kiday. Actually, how you going.
Speaker 5 (01:44):
I'm good, Tom, I'm good. How about you?
Speaker 4 (01:46):
I'm not too bad.
Speaker 3 (01:48):
There's so much to sort of get my head around
with all the information that's a rocking in on around
the property market. What's gonna where things are going and
all that. Hey, actually, before we get into it, just
had to ask you with whether you think that the
departure of the Reserve governor, although that's not the it's
not the freshest of news, but whether that's going to
(02:11):
have any impact on the property market in terms of
obviously the way the Reserve Bank approaches the cash rate
and all that sort of stuff, because I sort of
think will it make any difference?
Speaker 5 (02:21):
Yeah, potentially, potentially two quite major differences. The first one
is by dint of the choice of replacement for Adriana
or so whoever, and Nicola Willis chooses if that's the
right person, That act, in itself could substantially restore a
confidence to the market more quickly than it might otherwise
have been the case, so that could be a major
(02:42):
And secondly, what that person, whoever he or she might be,
is likely to do with regard to the orderly recession
or that's the wrong word, but the orderly reduction of
the ocr and therefore mortgage interest rates over the next
twelve months, because we know mortgage interest tracks are coming
down or had indicated a particular trajectory for that. If
this person does that more quickly, then that will obviously
(03:02):
also have an impact. So yeah, potentially two quite substantial
impacts on the market as a result of this change.
Speaker 3 (03:08):
So it's more is it more just about having a
sense And we know that you weren't much of a
fan of Adrian Orris. In fact, I think, well, it
wouldn't be just you. I think there are some people.
I think Michael Rodell said that he was the worst
Reserve Bank governor we've ever had. Was I think that
was the gest of I don't know that's my recollection
of his comments as well.
Speaker 5 (03:26):
But Michael has been too kind.
Speaker 3 (03:29):
Well, you can't be worse than the worst. But do borrows,
how much do people pay attention to really who's running
the Reserve Bank. I mean, how far ahead? Is this
more from the point of view of investors who like
to have this sort of sense that there is a
safe pair of hands at the controls.
Speaker 5 (03:48):
Well, it's funny you should say that, because if you
asked me that question five or six years ago, before
Adrian or came into the position, I would have said
virtually nobody except ear kids.
Speaker 3 (03:54):
So most people I should have praised it that way. Actually,
is this just a question for air kids?
Speaker 5 (04:00):
Including myself by the way, so I would have regarded
myself as an ear kid. It wasn't sort of thing
most people were animated about. Since this guy's been there,
and increasingly over the last two or three years, I
think most people knew who he was because of the
complete mess that he'd made of monetary policy over the
last four or five years. So if you I mean
he was the topic of dinner party conversation in a
way that no previous Reserve Bank governor had been.
Speaker 3 (04:20):
Wasn't that just because of a style of delivery or
as well, because I mean, how much responsibility does the
Reserve bank governor really have when you've got all the
There's a lot of people around him who are helping
assess you know, what's going to happen with the cash right,
and of course famously I think this time last year
he was predicting he wouldn't be raising the cash straight
and reducing the cash rate until about now.
Speaker 4 (04:40):
Whereas have he done it?
Speaker 2 (04:41):
Yeah?
Speaker 5 (04:41):
No, ann a nunci tick question. How much power has
he got? Total power? Because with regard to all those
other advisors that you're talking about, yeah, you're right. He
surrounded by and in fact he was surrounded by an
increasing number of people because he was raising the head
out in the Reserve Bank. But ultimately those decisions were his,
and you could argue the boards, but primarily his. He
was the guy with whom the bucks stopped, no pun intended.
(05:02):
So he had enormous power. But he had enormous power,
not just in in that sense, but also in the
sense that the decisions made by the Reserve Bank determine
pretty much what happens to the economy of this country.
And you've seen the effect of that over the last
two or three years as he has driven us into
a deliberate and not my words his, a deliberate managed
recession in order to bring inflation under control. Now that
had to happen. There's no question he had to do that,
(05:23):
but he only had to do it because of the
mess that he made of the economy after twenty twenty.
So yet total control, total control, far more control than
the Finance minister. For argument's sake.
Speaker 4 (05:32):
Yeah.
Speaker 3 (05:33):
Actually, I've argued before that people can talk about the government,
whether they like their government very much and what they're
doing here, but the person who has the biggest impact
on our economy was the Reserve Bank governor because basically
the engineered recession engineered job losses, you know, the cash
rate low for too long, which inflated the property market up.
Speaker 4 (05:50):
So people.
Speaker 3 (05:51):
I mean, in terms of the well being of New
Zealanders financially, there's no one more influential, I would argue,
although funnily enough, at the same time, I'm not sure
I would have worried about who was a Reserve Bank
governor it came to me fixing my mortgage.
Speaker 5 (06:08):
Yeah, But whether you would have or not, he had
a massive influence on that. The other point I would make, too,
because the corollary of that question, or the add on
question to that, would be, well, if this person has
so much control, maybe they've got too much control, to
which my response would be that hasn't been a problem
since nineteen ninety, since nineteen ninety up until arguably the
last Reserve Bank governor, Alan Wheeler, who was starting to
(06:29):
come off the tracks a little bit, but certainly prior
to him, that we got exactly the right people each
time in that role, and so so, no, I would
never have argued at any previous time that they had
too much power, because we had the right people. They
weren't politicized, they were focused on the right things. It's
just him and to a lesser degree, his predecessor, that
have taken this thing down a rabbit hole.
Speaker 4 (06:47):
So are you.
Speaker 3 (06:48):
Waiting with beta breath for who the next governor is,
or a bit more relaxed just think, oh, well, it's
we've got. I didn't like Adrian, therefore he's gone some
sort of fairly sanguine from here on.
Speaker 5 (07:00):
No, I am waiting with beta breath, and I'm waiting
but beta breath particularly because and this does relate to all,
he had taken the Reserve Bank in the direction it
had never I mean, he was into climate change and
wokeism and a whole range of stuff that had nothing
to do with the remit of the Reserve Bank, and
for me, confidence won't be restored until a new Reserve
Bank governor says, we're having a major restructure of the
(07:20):
mechanism of the bank itself and we're clearing the stuff
out and just putting a focus back on our primary remach.
So that's what I'm looking for.
Speaker 3 (07:25):
Well, based on the stuff I've read from Michael Riddell,
some might argue that it needs to be more than
just a replacement of the Reserve Bank governor, because there
was a board put in place where you might have
locked at. I mean Michael Roddell if you want to
read his blog and Craking Cassandra if you're listening about
the board. It's not too hard to google. But he
has a pretty scathing take on the not so much
(07:46):
the people as individuals, obviously because they're just individuals, but
in terms of their qualifications to be on the board
of the Reserve Bank. I would have thought that would
be something that would probably need to be looked back,
looked at at some stakes.
Speaker 5 (07:57):
Will completely agree, although even as I say so, yeah, yeah,
in a perfect world, would be looking at a new
Reserve Bank governor a complete cleanup of the board with
people who are actually qualified to do the job. But
as I say, the primary focus of that Reserve Bank
or the primary power resides in the Reserve Bank governor
him or herself. So for me that that's the major
(08:17):
thing that I'll be looking for to see what Nichola
Wildas does in that space.
Speaker 3 (08:21):
Okay, well, let's by the way, you can offer your
comments on that. If you are someone who's involved in
the property market or looking at getting into it, do
you watch who the appointment is when it comes to
the Reserve Bank governor as to how important it is
or are you sort of more just interested in watching
what happens with the cash rate, because I mean, one
does announce the other. And as Adria sorry, as Ashley
(08:42):
has said it used to be a question for only
the eggheads to use Ashley's word on that one, I'm
not sure how I define an egghead, but I think
we want to get what you're talking about there. The
thing we're going to dig into a little bit today
as well is the question about where the property market's
at in terms of affordability and whether the market is
(09:02):
actually becoming more accessible.
Speaker 4 (09:06):
The core logic has.
Speaker 3 (09:07):
Got data showing that it's the best level of property
affordability since before COVID. Actually that's not a huge window
of time, is it. What's your take on where we're
at with the affordability and accessibility of the market, Ashley, Well, they're.
Speaker 5 (09:22):
Right, but this isn't any great revelation, and let me
tell you why. So I talk about this, or have
talked about this, including to you, in the past, quite
a lot. And this is this whole question of when media,
clearly not you, but others, when media talk about affordability
of house prices, they tend to focus on just two things.
They tend to focus on the house price and the
average household income. And based on those two measures, houses
(09:46):
in Auckland, for argument's sake, have gone from I think
four times household income in the year two thousand to
about nine or ten times income by about twenty twenty.
But that figure is actually spurious because it doesn't take
account of the third factor in that triumvirate, which is
the cost of money interest rates. The average interest rates
given time, and I've used an example before, but I'll
(10:07):
use it again to put these figures you have just given
me in context. Come back to nineteen eighty seven, And
you take the average household income in New Zealand And
by the average interest rate mortgage interest rate prevailing in
nineteen eighty seven, which was up around twenty odd percent,
and you look at the average house price in New
Zealand at that time. If you took all those three
(10:28):
things together and you put them into a melting pot,
they would have told you that at that time, in
nineteen eighty seven, the cost of servicing a mortgage in
New Zealand for an average household was about fifty two
percent of total household income, so over half of what
you actually earned. By mid twenty and eighteen, that figure
same thing, average household income, average house price, mortgage interest
rates at the same time. By mid twenty and eighteen,
(10:49):
that figure had dropped to thirty seven percent. So and
the reason that should come as a shock to people
is because if you asked people putting that aside, if
you said to people, the houses more or less expensive
in twenty and eighteen, they would have said much, much,
much more expensive because they were only looking at the
headline figure. But when you took all of those things
into account, it was actually cheaper to service and mortgage
in twenty eighteen than it wasn't nineteen eighty seven, or
(11:10):
indeed for several years after nineteen eighty seven. Now, the
reason I tell you all that is what's happened, what
these figures that you've just quoted to doing, is basically
taking those same factors into account and are saying, because
mortgage interest rates are now dropping, because there's been a
little bit of an increase in household incomes, and because
house prices have batantly flattened and bottomed out over the
last two or three years, we are in a more
(11:31):
benevolent space than we were in twenty twenty, which, without
actually analyzing figures, it's true, absolutely true for those reasons.
That will change. Obviously that will change over the next
few years is house prices go up, but it will
be moderated to some degree by the fact that mortgage
interest rates are coming down. So and it feeds into
a bigger issue, which is one I'm a great advocate of,
(11:51):
which is house priced increases are driven overwhelmingly more than
any other factor by the cost of money. House prices
go up when the cost of money comes down, and
that's what we're about to see over the next two
or three years.
Speaker 3 (12:03):
Yeah, because I wanted to tie it in too as well.
I mean to put our crystal ball. I was quite
surprised when I saw totally Alexander's piece about how much
can we expect house prices to rise over the next
thirty years. I've assumed that that's cumulatively is because at
the moment, the data shows that house prices in New
Zealand have risen on average seven point two percent a
(12:25):
year since nineteen ninety two, with Auckland prices rising eight
point two percent a year. And now Tony says, based
on a bunch of factors that he thinks that we're
going to see a change in that rate, that it
will instead rise between five and six percent for a
bunch of factors that he outlines in his piece.
Speaker 4 (12:44):
What's your take on that as well?
Speaker 3 (12:46):
Because just to put it in context, at six percent
growth over thirty years, a one million dollar house will
then be five point seven million, which still since like
all of a lot, doesn't it?
Speaker 5 (12:57):
So Interestingly, and with all due respect to a good mate, Tony,
I actually wrote almost exactly the same thing about three
years ago. But the reason you won't recognize the figures
is that I came at them from a different direction,
and I'll explain what I mean by that. So about
three years ago, because because I was bleeding away for
several for a couple of decades about the fact that
house prices double every ten years, and so I sat
(13:18):
down and thought, well, because I'd never actually analyzed it formally,
so I sat down and thought, well, I'd better actually
do this so if anybody asks me, I can actually
point to the numbers and show why I make that assessment.
And when I did that, I found that from nineteen
eighty to nineteen nineteen, nineteen ninety to two thousand, two
thousand to twenty ten, in twenty ten to twenty twenty,
for three of those four decades, house pricess had doubled
(13:39):
almost exactly within a ten year time frame. They'd gone
up by almost exactly one hundred percent, within about one
percent either way when averaged out over those decades. In
that last decade, though in that nineteen ninety twenty ten
to twenty twenty they had taken slightly longer term. That
actually taken twelve years. And the reason there's a range
of reasons for that, which I talked about at the time,
but basically, house prices will get that even though the
(14:01):
cost of money was coming down, the actual headline number
that you were paying to our house was higher, and
so it was physically more difficult for people to pay
a higher price. So that was slowing down the rate
at which house prices were increasing. Now, the reason that's
all relevant to what you've just asked me is if
you average out the average increase in the value of
a property per year in order to get it to
(14:21):
double over ten years, it's exactly seven point two percent
per year. So that's something they call a rule of
seventy two, which says that if house price is increased
by seven point two percent per year, they will double
ten years. Now, here's the interesting thing. If that slowed
down by the rate I indicated two or three years ago,
which was they were going to double over twelve years,
the rate of increase over that period was going to
(14:42):
be six percent per year, it's slightly slower. So it's
exactly the same figures as Tony's come up.
Speaker 3 (14:47):
Well, he's got Peace says five or six percent, I think, but.
Speaker 5 (14:50):
I'm saying six excent. I'm saying sex. Although it could
slow down a little bit further to five, but I'm
saying sex so I can't basically came to exactly the
same numbers that I arrived at them in quite a
different way.
Speaker 3 (15:01):
So I guess you know, you're looking thirty years out
and it does look you know, makes makes a half
million dollar house at six percent would be two point
eight million dollars. And it's difficult to imagine how what
our attitude towards money is going to be in thirty
years time, because just in today's standards, that just sounds like, what,
what do you mean a half.
Speaker 4 (15:20):
Million dollar house is going to be worth two point
eight million?
Speaker 3 (15:24):
I guess the thing is, do you think the question
that maybe as part of the looking ahead is do
you think that the property while it's more accessible and
it's more affordable now, do you think the property market
as where it's valued right now is about right? Because
I've spoken to people who think, well, to be honest,
given the state of our economy and all that sort
(15:45):
of thing, and the fact that FOMO has driven things
in the past and then cheap money, that we're still overvalued.
Speaker 4 (15:49):
What do you reckon?
Speaker 5 (15:50):
So firstly, let me just finish off what I was
going to say before with regard so that projection over finished, Yeah,
that's all right. So that article went on to then
say what will happen over and it actually talked about
the next fifty years, and it basically said that the
rate of doubling over each decade would be slower and
slow so, and the reason for that was because the
headline price that you were paying was less and less.
(16:12):
So whereas it was twelve years over the last decade,
it might be thirteen or fourteen over the next decade.
The one after that, it might be fifteen or sixteen years,
which means rate of increased per per year will reduce.
So whereas Tony saying four to five over the next
thirty years, I wasn't as ballish as that. I'm saying
it'll slow down. In fact, we might get to a
point by sort of two thousand and seventy, two thousand
and eighty, where you know, it only goes up by
(16:34):
one or two percent per year a year on year.
So kind of the same numbers up until now, different
trajectory going forward. But with regard to your questions, which is,
are they about right? There's no such thing. There is
no such thing as a property market where the prices
are about rather and the reason for that are that
there are a whole thing, There are a whole range
(16:54):
of things that actually drive house price growth, but primarily
the cost of money pushes house prices up. And so
as long as the cost of money goes up and
then comes down again, as it's just done, it will
always fuel another boom. So the fact that we've just
seen a massive increase in interest rates and then those
interest rates are coming down will absolutely, assuredly, without any doubt,
(17:16):
will fuel another house price boom, and house prices over
the next five to ten years to the point where
in the next whether it's twelve or thirteen or fourteen years,
house prices will be double what they currently are today.
That's just a fact, and that's not an opinion. I
can prove that with data, and I could show you
how that happens over a period of time. So there
really isn't a point where you would say house prices
(17:36):
are about right, because who's to make that determination. It's
completely subjective. What it comes down to at the end
of the day is what will the market do, And
the market will respond to the factors that are currently
at play, and the factors that are currently at players
that the cost of money's dropping.
Speaker 3 (17:49):
I guess I guess the reason I've always I mean,
you know, you're more of an expert on these things
than I am. But I guess the thing is when
you look at the economy and the fact that people
you know, New Zealand doesn't feel like it's particularly rocky
and rolling at the moment, and immigration is, you know,
in a reverse at the moment.
Speaker 4 (18:08):
It does.
Speaker 3 (18:09):
I don't know, one does feel that there's got to
be some level of economic activity in GDP and all
that sort of stuff.
Speaker 4 (18:16):
It has to in some way connect with what the
property market.
Speaker 5 (18:19):
So it's an interesting should ask that. So our property
house price booms have never been coupled to our economic
boom busts. Ever, so sorry, let me put that another way.
If they haven't been coincidental, and it's only been part
way toward the end of the beginning of a boom.
So what I mean by that is if you look
at when house prices have increased, they have had no
relationship to the wider economy booming or busting. And that
(18:44):
entire period, that forty year period that I talked about previously,
for no reason to believe that this will be any different.
So while it would be nice to think that house
prices go up at a time when we've got prosperity
and people are earning more, there doesn't that relationship doesn't
seem to exist.
Speaker 3 (18:57):
Okay, we might dig into this a little bit more.
We want your cause on this as well. E one
hundred and eighty ten eighty. So just your predictions really
of the property market. It's going to grow at a
slower rate. But I mean, I would have thought that
would have been inevitable in terms of percentages and how
quickly are relating to well Ashley would disagree with me
on this, but how quickly the economy is growing and
all that sort of thing. But anyway, Tony, like Alexander
(19:18):
has said, he expects property house prices to grow between
five and six percent wherein is in the past it's
been between seven and eight percent per year, and his
prediction being for the next thirty years. What do you
reckon I eight hundred eighty t and eighty. But also
do you think that given that core logic is showing
that we're at our best level of property affordability since
(19:39):
before COVID, is this pretty much it. This is the
sweet spot. If you want to get into the property market,
you need to do it now. I eight hundred eighty
ten eighty it's twenty six past four. News Talk said blows.
Speaker 6 (19:53):
Well, my name Seve, myself our set things you don't understand,
can take yourself.
Speaker 4 (20:18):
Guess.
Speaker 3 (20:18):
Welcome back to the one Routh radio show. I'm Tim Beverage.
My guest is an independent commentator at Ashley Church. We're
talking about is the are we at the sweet spot
at the moment with Apparently according to call logic, it's
shown that we're at the data is showing that we're
the best level of property affordability since before COVID. Is
this enough for you to decide if you're interested in
getting into property, whether it be as an owner, occupier
(20:40):
or an investor. Is this a sort of sweet spot
for you? Or are you a little bit sort of like,
oh well, I'm just you're still not there yet. And yeah,
we want your calls on eight hundred and eighty ten eighty.
Just a few texts Ashley before we get into it.
Just wondering what impact labor potentially reintroducing the inability to
(21:01):
claim interest for landlords would have that would have an impact, well,
government policy, let's just talk about that broadly, so.
Speaker 5 (21:08):
On investors, it will remember investors aren't While they're an
impact on the market, they're not the only pact, and
they're not the most significant impact on the market that
would be first turned buyers. So it'll have some impact.
But if you even it out or average, get out
across the whole market and look at its total impact,
you might be talking half a percent or one percent
in capital growth of each year over ten years.
Speaker 3 (21:27):
Yeah, one of the factors that Tony refers to because
you talked about it's just cheap money that drives a boom.
But of course, if the supply is there to meet
the demand, if we're building more houses. He's talking about
boomers selling up as they're trying to fund their retirement.
Is that a bit of a Is it a bit
of a handbrake on growth in the market in terms
of prices.
Speaker 5 (21:47):
That's an area where there's very few areas where Tony
and I disagree, But that's an area where Tony and I,
and infect Toniu and me and most other commentators disagree.
I'm sort of on my own, but I very strongly
of the view that suppli has got very little to
do with house prices. And the reason I say that
is that, and I haven't got the exact figure on me,
but from the MIDA through till about twenty twenty, we
(22:07):
had actually increased our total supply by about two hundred
and fifty thousand more houses than we actually required just
to stand still population wise, in terms of everage occupancy
made absolutely no difference the house process over that period
of time, they continued to go up.
Speaker 3 (22:21):
Do you think that the same emotions that drive people
with property, I guess would be my question that I
sort of felt, and I've had a chat with a
couple of other property people about this, that back in
the John Key days and around that, there was a
hell of a lot of the property was everyone's darling
if you can get into it. Leverage and Fomo drove
(22:41):
a lot of it. And I just wonder, if you know,
attitudes of buys, our attitudes towards a lot of things
change over the years. And I guess to me, I
mean the idea if there's more houses being built, if
we don't have these high levels of immigration, because that
was one of the things that was seen as being
(23:02):
fueling it as well, whether in fact that FOMA might
not reach the sort of fever pitch that we've seen
in the past. If the supply is there, I mean,
why would you be worrying about missing out if the
policies of the government are leading to more houses being
built and there's more coming on the market, because so
the boom is sewing up.
Speaker 5 (23:19):
So I can only repeat that that house price supply,
that housing supply has never been a factor. So if
you look at when the booms have been and when
supposed that what we're supply has been, those periods of
time has had virtually no difference at all, and equally,
and I hear what you say with regard to immigration,
but same applies. We've had really high house price inflation
and boom markets and property in New Zealand at periods
(23:39):
of time when our migration was virtually nell or even
going backward. And so yet to understand that and this
is only an opinion, but it's an informed one, you
kind of have to look back to why the property
was the darling of the sort of the investor classes.
And you've got to go right back to the late
seventies to Bob Jones, when Bob Jones was running property
investment seminars in New Zealand and publishing his box Jones
(24:02):
on Property and other publications on and he basically birthed
the property investment industry and he created a whole class
of property investors back in the early eighties it previously
didn't exist. Who went on to then create an even
bigger industry. And so what's happened over that forty year
period of time is that Kiwis have become in my view,
you know, this is a subjective, but in my view,
(24:22):
probably the most informed property investors on the planet. They
understand property better than most other nations. They understand how
it works. They've made it work for them. And the
reason for that is because New Zealand doesn't have what's
called deep capital markets. It doesn't have other places that
we can invest. We've got a share market, but it's
a pretty manky one. We don't have the sorts of
investment mechanisms that most other nations have got. So we've
(24:44):
tended to literally put all of our eggs in one
basket and invest it into property and it's worked well
for us. There A research study came out of two
or three years ago from I'm just trying to remember
who came from, basically saying the New Zealander is with
the fifth wealthiest nation on Earth when you took into
account their asset base, so it didn't mean that they
were necessarily better paid than other nations, but in terms
(25:04):
of their total wealth you're talking to account their property
as well, they were. They were the fifth wealthiest nation
on the planet, ahead of other nations that you might
think of as being much wealthy.
Speaker 3 (25:12):
I guess, yeah, sorry, Kara, I was just going to
say so.
Speaker 5 (25:16):
So I'm very firmly of the view that if what
you were saying is correct, then it would have to
it would have to be replaced by some other phenomenon,
it would have to be. So. The only time in
my lifetime that anything has replaced property it was during
the mid eighties when we had the shear market craze,
and if you'll probably remember it terms, some of the
listeners won't. That did not work out well for Kiwis.
(25:36):
That did not work out well. Lots of Kiwis lost
this well. Shoot.
Speaker 3 (25:39):
If ireed to play a devil's advocate, I would say
the property market back when money was really cheap didn't
work out because people overpaid and then they lost a
lot of money because they were three and then they
were spent a couple of million bucks on a house,
which you know, they.
Speaker 5 (25:52):
Still had these but they still had the asset term,
and that asset always recovered. So over time, that asset
recovered the value that they might have lost at that time.
That hasn't happened very often in forty years. Most times
when the market's dropped away, it's simply gone flattened there
for a while. So the trajectory of property in this
country as a pretty reasonable linear line upward, with a
couple of periods. One of those, well let me finish,
(26:14):
because this is important, one of those in the mid nineties,
and one of those again during the GFC, so you
can you can only and then of course during after
twenty twenty, so you can only point to three times
in that entire thirty year period where there's been a
backward trajectory in prices, and all three of those properly
not only recovered, but it went on to be worth
much much more. So you know, I'm not I mean,
it's not not my bag to defend it, but the
(26:36):
figures don't agree with what you're saying. The figures say
that it's been by far and away the safest form
of investment, and that's by Kiwis of State.
Speaker 3 (26:42):
Yeah, I think, I guess when you say that, we
look back and what was that figure about we were
the most the richest asset wise of one of the
top five or something.
Speaker 4 (26:51):
What was that figure that you mentioned.
Speaker 5 (26:54):
We were remain the top five? We were the fifth
wealthiest nation on earth about.
Speaker 3 (26:59):
Yeah, I think that the question would the instinctive response
I'd have that would be like, well, clearly we were overvalued,
because what do we have going in our economy apart
from that that would make property that valuable? Was it
a nominal value that we were all busy friends frantically
(27:19):
trading with each other and pumping the value up when
in fact, with you looked at the value of the
whole New Zealand economy, it was giving an artificial view
of what we were worth. Because I just I guess
I'm trying to find a simpler way to put it
that it wasn't Underpinman but any other economic data.
Speaker 5 (27:36):
I understand your point, but who makes that determination? Who
says that something's overvalued? Property is worth what people are
prepared to sell and buy for. So, because I've heard
this term before about being overvalued, and with all due
respect to you, it's a term that people make without
actually really understanding what's actually going on within that market.
If people are prepared to sell for that amount and
commenturately pay for that amount, that's what that's worth. Now.
(27:58):
If that then went backward, if it was like the
tulip boom and Holland or Ostrich eggs or whatever, and
those things ultimately crashed and went back with then you
might have a point with that, but they haven't. So,
as I say, with the exception of those three periods
of the last thirty odd years where there's been a
correction in the market, or on all three of those occasions,
it then went back to where it was before and
then continued on on its trajectory. And so then the
(28:20):
next argument that people put to me is, oh, well
it's not sustainable. Well, how long do you judge sustainability
over because we've had forty years of this, and that
forty years has worked out pretty well for people that
have invested in this particular asset over what period of
time you know, I mean, people have been born and
died over that period of time. So for me, if
you're looking for something that's actually going to work, and
I sound like I'm defending this thing and it's not
(28:40):
here nor there to me whether people buy property or not.
But for me, if you look at this asset over
the last forty years, it's been incredibly safe and that's
why key Wes have stuck with it.
Speaker 3 (28:48):
I mean, well, actually we'll dig into a bit more
of this after the breakbit. We'd love your cause on
this O E. One hundred and eighty ten and eighty
Do you agree with Ashley that you know it is
what it's worth and it's I'm trying to sum up
your stance. Actually it's difficult because you've spent a while
explaining it and so I don't want to do it
to disservice by just a couple of sentences. But yeah,
if you've been listening to actually do you agree with
what he's saying about the value of the property the
(29:10):
property market? Do you think actually also do you think
right now what we're seeing is the most affordable it's
going to be? And give us a call on eight
hundred and eighty ten eighty text nineteen nine two back
in a month having blas to.
Speaker 6 (29:22):
Have value that a little.
Speaker 3 (29:32):
To Key's Welcome back to the one Roufredia show. My
guest is Ashley Church and we're chatting about just the
state of the market and what we think is going
to happen over the next sort of ten twenty thirty years.
Tony Alexander has predicted that the rate of house price
growth will change from what has been seven or eight
(29:53):
percent of depending on whether you're a nationwide or auckland,
to around five and six percent, and he's explained where
he thinks that the restraining factors that will kick in there. Actually, Ashley,
what is holding in is back at the moment because
they don't seem to be piling into the market.
Speaker 5 (30:07):
Do they cost of money and confidence?
Speaker 4 (30:10):
And do you see that changing much?
Speaker 5 (30:12):
Yes, to do so. Confidence is returning now and cost
of money is coming down. If I was to mention
a third factor, it would be that the impact of
higher interest rates has pulled a lot of them in
to pretty straightened conditions over the last three or four years,
so some of them are recovering from that. But the
three are into related. When the cost of money comes down,
that will restore confidence and it will improve their current position.
Speaker 3 (30:31):
So when you say cost of money and confidence, you
just mean cost of money then, because if one if
confidence results from the cost of money, then that's all
it's about, is it.
Speaker 5 (30:40):
Well, no, that's a good question actually, because you could
argue that, I mean, who knows where the sweet spot is,
but you could argue we might have already got past
the sweet spot in terms of the cost of money.
So then it comes down to whether investors have got
confidence that the Reserve Bank's going to stick with that
trajectory where the monetary policy is going to continue that way,
or whether it might reverse again. So that's where confidence
kicks in. And there's been a bit at that over
(31:02):
the last year with Awas saying something and then six
months later doing something different. So that's that's the impact
of confidence. People saying well, yes, cost of money is
coming down, but I need to be absolutely certain it's
going to stay down.
Speaker 3 (31:12):
Do you think that the policies of the government when
it comes to enabling more development in other words, a
lot more houses being built, you know, opening up patches
of land for developers to get stuck into, do you
think that plays much of a partner, because I mean
that's the old Kensian supply and demand thing, which you
don't sound like you're quite such a fan of the
Kensian economics on this one.
Speaker 5 (31:33):
Not on this one. I mean, I believe in Kensi
and not economics in a general sense, but when it
comes to property, and it's not about me being a
fan of it, it's just that the data doesn't support it.
The data tells us. I mean, I've had conversations with
Chris Bishop on this, because he's very much in that
camp of if you build well, you know, you build it,
they'll come. The data just doesn't support it. The data
shows that when we build more houses it makes no difference.
When we build less houses, it makes no difference. It's
(31:55):
primarily about the cost of money.
Speaker 3 (31:56):
Are there other factors that are in there at play
when we build more houses though, such as if we're building, say,
I don't know, fifty thousand more houses a year, but
we've got an immigration rate of two hundred one thousand people.
Speaker 4 (32:06):
You can understand.
Speaker 3 (32:07):
So what I mean is is it are we looking
at those figures taking into account other factors that might
be influencing it, like the population growth or decrease or increase.
Speaker 5 (32:17):
Well, again, as I say that, some of the periods
of biggest house price boom, I'm just thinking of the nineties,
for example, and again in the two thousands were at
periods when our migration was either static or in a
couple of cases, actually going backward. So there doesn't seem
to be a direct and obvious causal link between the two.
And I know that's counterintuitive, but the reason for me
(32:40):
it's because the cost of money is such a big
factor over and above and I think if you think
about that, think about it if you're an investor, and
if you're an investor, but you're looking at ten, fifteen,
twenty years for your property and what in confidence that
it's going to go up and value over that period
of time, and making sure that the cost of it's
not going to be so much that you're going that
you're going to be able to continue to afford to
sustain the mortgage. And that's a far bigger fact to
(33:02):
you than what we might be going on in the
economy right now.
Speaker 3 (33:05):
What about with at the moment, it feels like the
rental market's a bit soft, and so there was a
time when you know, if you are in a property investor
and you had a property rent, you'd have people fighting
over and of course good properties will always have competition
for people to rent it, but it doesn't feel that
that's the vibe right now, and there seems to be
a bit more flexibility and people are able to pick
and choose a bit more. Does that affect investor confidence
(33:25):
when it comes to the market.
Speaker 5 (33:26):
That's a really interesting one because I mean, if I
look back over the last ten years, and it only
needs to be a reten year period, look at the
period of time when people have said the market soft
versus the markets the rental market, software sus the rental
markets fall on. That can come and go within a
period of six or seven months, so that can turn
really quickly. You'll find that, you know, there'll be and
there's all sorts of reasons for that because it differs
(33:47):
in different communities. But the regional agencies you'll be saying, hey,
look it's a really soft time at the moment, we
haven't got good tenants. Three months later you'll come back
and talk to the same agency on they say, we
haven't got enough stock. We need to get more because
people are wanting to rent so the things that drive that.
A they're regional and situational, and B they can and change.
Speaker 4 (34:05):
On a dime.
Speaker 5 (34:06):
So those aren't Those aren't the sorts of things that
soft now it's still going to be soften a year.
Speaker 3 (34:11):
Your involvement in the property market, now, I mean, you
commentate on all sorts of things, but what's your involvement.
Are you sort of you've had you've done your days
of buying and selling, or do you still sort of
dabble a bit.
Speaker 5 (34:21):
I've certainly done my days of buying and selling. Still
got a few properties get slowly moving out of the market.
Not in any huge hurry because I'm very confident about
the market over the next five or six years, but
more of an observer now. But my big thing's always
been and I mean, you know, that's one of the
reason I've always appreciated the opportunity to talk to you.
So he's been about the numbers around it. It's not
so much around you know, for a lot of investors,
(34:42):
it's the excitement of the push and pull of the market.
For me, it's always about the numbers, and it's always
it's all that stuff that's counterintuitive, And I've i guess
I've focused him over the last you know, probably ten
years on looking to see what the data says versus
what you know common wisdom says. And often those two
things aren't the same. In fact, the lots of case
two things, well they're not. And so it's fascinating because
(35:04):
because on the one hand, and you'll have people there's
almost like an urban mythology around property investment, which will
say four or five things, and when you analyze those
four or five things, you'll often find that the data
see something quite different.
Speaker 3 (35:15):
We've got a text here from Jak says, actually he's
not taking into account astronomical rates and insurance increases. No
one and Wellington will be able to afford insurance in
a few years. As rates and insurance are doubling every
five and ten years, our insurance is doubled in three years,
it will affect property prices.
Speaker 4 (35:29):
He's quite right.
Speaker 5 (35:30):
Yeah, he's absolutely right. Wellington in particular is I mean,
it's a basket case and the sooner an election can
come in Wellington, the council you've currently got tossed out
because it's a disaster. So no, he's absolutely right. Insurance
to a lesser degree insurance is sort of comes and
goes as effective. But rates in Wellington right now are
criminal and that's going to need to be dealt with
(35:52):
by a summer re election and get rid of the
muppets at the current word.
Speaker 3 (35:55):
Now, they've got a lot to spend, They've got a
lot of they've got to spend a lot of money
on quite a few things.
Speaker 4 (35:58):
I guess.
Speaker 3 (35:59):
So I can't imagine those rates coming back and hurry,
can you?
Speaker 5 (36:02):
Well, I can't, but the speed, the rate at which
they increase could yeah.
Speaker 3 (36:05):
Yeah, right, we'll be back in a moment. The one
Roof Property of the Week is next. It's twelve minutes
to five news Talk s'b es News Talk z B
with Tim Beverage Chan right now it is what is it?
Eight minutes two.
Speaker 1 (36:17):
Five the one roof property of the week on the
Weekend Collective.
Speaker 3 (36:24):
Yes, the one roof Property of the Week, don't forget.
You can go to the One Roof for a website
to check it out. It is nine to nine Old
North Road y Mocal in Rodney. Four bedrooms, four bathrooms,
three car garage, twenty additional off street park off street parks.
And that's probably explained by the fact that the land
is eight point three hectares, it's built in ninety seventy
(36:45):
ninety ninety six.
Speaker 4 (36:46):
Sorry, and look it's it's.
Speaker 3 (36:48):
Not one You're just going to probably buy it for
a first house, unless you get the winning lotto ticket,
and even then you might still want to leave a
little bit more cash left over. It's estimate is at
six and a half million dollars. It is crafted with
meticulous attention to detail. Interiors evoked the ambience of a
high end boutique hotel, and just having a look at it.
I always love to just go by the photos, but
(37:10):
it's always a bit tricky for radio. But the gardens
and the pool, well there's a bit of there's a
bit of effort that goes into that garden. Actually is
the sort of you've hat to look at him jashly, we'll.
Speaker 5 (37:23):
Just very tusk and looking. I sort of imagine there
must be vineyards attached to this thing as well. It's beautiful.
Speaker 3 (37:27):
What I was thinking is that if you have the
purchase price, and I mean the interior is are magnificent
as well, aren't they. But that gardens, even if your
mortgage free, I think I don't know what your gardening
bill would be, but it wouldn't be just a case
of paying someone a hundred bucks to come into mow
the lawns what it.
Speaker 5 (37:44):
No, you'd need a full time garden and pool boy
and whatever else. It looks like there's a stable there
as well, So maybe a stable end.
Speaker 3 (37:51):
Actually in terms of because I'm looking at the interior
of it and the tiling and the sort of mosaic
tiling and the hallway, and it's just it does seem
absolutely immaculate. Actually, I know it's a lot of money,
but for six million bucks, and you can see where
the money has been spent, can't you.
Speaker 5 (38:09):
It's I was thinking, I used to watch Falcon Crest
in the eighties. It's kind of that sort of home
modern for the modern era.
Speaker 3 (38:15):
It's beautiful Falcon Crest in the eighties.
Speaker 4 (38:18):
Good lord, Falcon Crest. What was that? Where was that set?
Speaker 3 (38:23):
I guess it was a place called Falcon Crest?
Speaker 6 (38:24):
Was it?
Speaker 5 (38:25):
It was del Dallas esque?
Speaker 4 (38:26):
It was.
Speaker 5 (38:27):
I think it was a different tween. We're trying to
do a knockoff of Dallas, so i'd had that sort
of feel to it.
Speaker 4 (38:31):
Okay, was that sort of the budget version of Dallas.
Was it Falcon? I do remember the name of it.
Speaker 5 (38:36):
Budget?
Speaker 4 (38:36):
What's that?
Speaker 5 (38:37):
I don't know if it was all that budget, but yeah,
they lived in a house that was not unlike this
from memory.
Speaker 4 (38:43):
Yeah it is pretty magnificent. I always think these things.
Speaker 3 (38:45):
It's fun looking through the sort of posh houses in
a way because it's like any bit of a holiday.
Do you still sort of do you still still serve
property sites looking at various properties like this? Do you
ever sort of go I might ever looked at a
few properties and take yourself for a.
Speaker 4 (38:59):
Little bit of a visual holiday.
Speaker 5 (39:01):
I only want to talk to you, Tim.
Speaker 4 (39:04):
The sun has.
Speaker 3 (39:04):
Always show and when you're talking to me, Ashley, oh hey,
so what actually what's what's your next sort of venture
with it? So you're basically just keeping taking things easy
with property. But you're doing plenty of writing and opinion
work on things, aren't you.
Speaker 5 (39:18):
You're doing a lot of political commentary these days instead
of talking about what's happening in the international world scene
as well as New Zealand and really enjoying that. It's
probably I mean I had a great time with property
for a long time, and you know, I really enjoyed
that and but sort of my interest have moved as
they do. I'm sixty one now, so I'm sort of
becoming a grumpy old man and everything.
Speaker 3 (39:37):
So spring checking, well, we won't we won't talk about
the politics dis because it does the property out, but
there's certainly plenty of de peak your interest on that.
Go and have a look at how are they selling
this house on the one roof site deadline sale. There
you go. You've got two weeks to get, twelve days
to get your bit in, so there you go.
Speaker 4 (39:56):
Hey, good to talk to you, Ashley. Thanks mate, Yeah, yeah,
look forward to it. That is Ashley Church.
Speaker 3 (40:02):
And if you want to check out the conversation we've had,
which was well, it was an intense covered a few
topics there on the just where the property market's going
and what we can expect over the next few years,
and it's always a good information if you're thinking maybe
now it's the time to get into it as well.
Go and check out Tony Alexander's piece on the one
(40:22):
roof side as well. And of course the report from
core Logic around affordability, which is showing that affordability has
hit its best level since twenty nineteen is probably something
you want to check out, if you've been thinking about
it's time to get into the market or not. Anyway,
we'll be back next with the Parents Squad. Catherine Burkett's
(40:43):
with us talking about how old your kids should be
allowed to stay at home, for, how long they should
stay at home, when's it time to kick them out,
among other things that will be next to the Parent Squad.
Speaker 4 (40:53):
It is four minutes, two five.
Speaker 6 (41:05):
Put them.
Speaker 1 (41:28):
For more from the Weekend Collective. Listen live to news
talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talks.
Speaker 2 (00:11):
Songle and Narvib Songle. You're just slam Avig Songle and
b I Mavib song and.
Speaker 3 (00:37):
Yes, welcome back to the Weekend Collective. I'm Tim Beverage.
And by the way, if you've missed our panel with
carmc Donald Wilhelmina Shrimpton, you can go and check it
out on podcast for the Weekend Collective on iHeartRadio would
be a good starting point, or the News all the
News Talks, it'd be website. So yeah, but now it
is time for the one Roof radio show with what
your calls and text eight hundred and eighty and eighty
(01:01):
and text nine two nine two member. There's a small
charge for the there as well, and we're gonna have
a dig into just what your expectation is over the
housing market over the next thirty years, based on a
piece that was written by Tony Alexander where he bravely
max a prediction on what he thinks the average rate
(01:21):
of growth will be and I think this conclusion was
around six percent. But also housing affordability, because right now
new data from core Logic shows that we're at the
best level of property affordability since before COVID and joining
us to discuss that. He is an independent commentator. Of
course you know him as a property commentator on this show, and.
Speaker 4 (01:41):
His name is Ashley Church Kiday. Actually, how you going.
Speaker 5 (01:44):
I'm good, Tom, I'm good. How about you?
Speaker 4 (01:46):
I'm not too bad.
Speaker 3 (01:48):
There's so much to sort of get my head around
with all the information that's a rocking in on around
the property market. What's gonna where things are going and
all that. Hey, actually, before we get into it, just
had to ask you with whether you think that the
departure of the Reserve governor, although that's not the it's
not the freshest of news, but whether that's going to
(02:11):
have any impact on the property market in terms of
obviously the way the Reserve Bank approaches the cash rate
and all that sort of stuff, because I sort of
think will it make any difference?
Speaker 5 (02:21):
Yeah, potentially, potentially two quite major differences. The first one
is by dint of the choice of replacement for Adriana
or so whoever, and Nicola Willis chooses if that's the
right person, That act, in itself could substantially restore a
confidence to the market more quickly than it might otherwise
have been the case, so that could be a major
(02:42):
And secondly, what that person, whoever he or she might be,
is likely to do with regard to the orderly recession
or that's the wrong word, but the orderly reduction of
the ocr and therefore mortgage interest rates over the next
twelve months, because we know mortgage interest tracks are coming
down or had indicated a particular trajectory for that. If
this person does that more quickly, then that will obviously
(03:02):
also have an impact. So yeah, potentially two quite substantial
impacts on the market as a result of this change.
Speaker 3 (03:08):
So it's more is it more just about having a
sense And we know that you weren't much of a
fan of Adrian Orris. In fact, I think, well, it
wouldn't be just you. I think there are some people.
I think Michael Rodell said that he was the worst
Reserve Bank governor we've ever had. Was I think that
was the gest of I don't know that's my recollection
of his comments as well.
Speaker 5 (03:26):
But Michael has been too kind.
Speaker 3 (03:29):
Well, you can't be worse than the worst. But do borrows,
how much do people pay attention to really who's running
the Reserve Bank. I mean, how far ahead? Is this
more from the point of view of investors who like
to have this sort of sense that there is a
safe pair of hands at the controls.
Speaker 5 (03:48):
Well, it's funny you should say that, because if you
asked me that question five or six years ago, before
Adrian or came into the position, I would have said
virtually nobody except ear kids.
Speaker 3 (03:54):
So most people I should have praised it that way. Actually,
is this just a question for air kids?
Speaker 5 (04:00):
Including myself by the way, so I would have regarded
myself as an ear kid. It wasn't sort of thing
most people were animated about. Since this guy's been there,
and increasingly over the last two or three years, I
think most people knew who he was because of the
complete mess that he'd made of monetary policy over the
last four or five years. So if you I mean
he was the topic of dinner party conversation in a
way that no previous Reserve Bank governor had been.
Speaker 3 (04:20):
Wasn't that just because of a style of delivery or
as well, because I mean, how much responsibility does the
Reserve bank governor really have when you've got all the
There's a lot of people around him who are helping
assess you know, what's going to happen with the cash right,
and of course famously I think this time last year
he was predicting he wouldn't be raising the cash straight
and reducing the cash rate until about now.
Speaker 4 (04:40):
Whereas have he done it?
Speaker 2 (04:41):
Yeah?
Speaker 5 (04:41):
No, ann a nunci tick question. How much power has
he got? Total power? Because with regard to all those
other advisors that you're talking about, yeah, you're right. He
surrounded by and in fact he was surrounded by an
increasing number of people because he was raising the head
out in the Reserve Bank. But ultimately those decisions were his,
and you could argue the boards, but primarily his. He
was the guy with whom the bucks stopped, no pun intended.
(05:02):
So he had enormous power. But he had enormous power,
not just in in that sense, but also in the
sense that the decisions made by the Reserve Bank determine
pretty much what happens to the economy of this country.
And you've seen the effect of that over the last
two or three years as he has driven us into
a deliberate and not my words his, a deliberate managed
recession in order to bring inflation under control. Now that
had to happen. There's no question he had to do that,
(05:23):
but he only had to do it because of the
mess that he made of the economy after twenty twenty.
So yet total control, total control, far more control than
the Finance minister. For argument's sake.
Speaker 4 (05:32):
Yeah.
Speaker 3 (05:33):
Actually, I've argued before that people can talk about the government,
whether they like their government very much and what they're
doing here, but the person who has the biggest impact
on our economy was the Reserve Bank governor because basically
the engineered recession engineered job losses, you know, the cash
rate low for too long, which inflated the property market up.
Speaker 4 (05:50):
So people.
Speaker 3 (05:51):
I mean, in terms of the well being of New
Zealanders financially, there's no one more influential, I would argue,
although funnily enough, at the same time, I'm not sure
I would have worried about who was a Reserve Bank
governor it came to me fixing my mortgage.
Speaker 5 (06:08):
Yeah, But whether you would have or not, he had
a massive influence on that. The other point I would make, too,
because the corollary of that question, or the add on
question to that, would be, well, if this person has
so much control, maybe they've got too much control, to
which my response would be that hasn't been a problem
since nineteen ninety, since nineteen ninety up until arguably the
last Reserve Bank governor, Alan Wheeler, who was starting to
(06:29):
come off the tracks a little bit, but certainly prior
to him, that we got exactly the right people each
time in that role, and so so, no, I would
never have argued at any previous time that they had
too much power, because we had the right people. They
weren't politicized, they were focused on the right things. It's
just him and to a lesser degree, his predecessor, that
have taken this thing down a rabbit hole.
Speaker 4 (06:47):
So are you.
Speaker 3 (06:48):
Waiting with beta breath for who the next governor is,
or a bit more relaxed just think, oh, well, it's
we've got. I didn't like Adrian, therefore he's gone some
sort of fairly sanguine from here on.
Speaker 5 (07:00):
No, I am waiting with beta breath, and I'm waiting
but beta breath particularly because and this does relate to all,
he had taken the Reserve Bank in the direction it
had never I mean, he was into climate change and
wokeism and a whole range of stuff that had nothing
to do with the remit of the Reserve Bank, and
for me, confidence won't be restored until a new Reserve
Bank governor says, we're having a major restructure of the
(07:20):
mechanism of the bank itself and we're clearing the stuff
out and just putting a focus back on our primary remach.
So that's what I'm looking for.
Speaker 3 (07:25):
Well, based on the stuff I've read from Michael Riddell,
some might argue that it needs to be more than
just a replacement of the Reserve Bank governor, because there
was a board put in place where you might have
locked at. I mean Michael Roddell if you want to
read his blog and Craking Cassandra if you're listening about
the board. It's not too hard to google. But he
has a pretty scathing take on the not so much
(07:46):
the people as individuals, obviously because they're just individuals, but
in terms of their qualifications to be on the board
of the Reserve Bank. I would have thought that would
be something that would probably need to be looked back,
looked at at some stakes.
Speaker 5 (07:57):
Will completely agree, although even as I say so, yeah, yeah,
in a perfect world, would be looking at a new
Reserve Bank governor a complete cleanup of the board with
people who are actually qualified to do the job. But
as I say, the primary focus of that Reserve Bank
or the primary power resides in the Reserve Bank governor
him or herself. So for me that that's the major
(08:17):
thing that I'll be looking for to see what Nichola
Wildas does in that space.
Speaker 3 (08:21):
Okay, well, let's by the way, you can offer your
comments on that. If you are someone who's involved in
the property market or looking at getting into it, do
you watch who the appointment is when it comes to
the Reserve Bank governor as to how important it is
or are you sort of more just interested in watching
what happens with the cash rate, because I mean, one
does announce the other. And as Adria sorry, as Ashley
(08:42):
has said it used to be a question for only
the eggheads to use Ashley's word on that one, I'm
not sure how I define an egghead, but I think
we want to get what you're talking about there. The
thing we're going to dig into a little bit today
as well is the question about where the property market's
at in terms of affordability and whether the market is
(09:02):
actually becoming more accessible.
Speaker 4 (09:06):
The core logic has.
Speaker 3 (09:07):
Got data showing that it's the best level of property
affordability since before COVID. Actually that's not a huge window
of time, is it. What's your take on where we're
at with the affordability and accessibility of the market, Ashley, Well, they're.
Speaker 5 (09:22):
Right, but this isn't any great revelation, and let me
tell you why. So I talk about this, or have
talked about this, including to you, in the past, quite
a lot. And this is this whole question of when media,
clearly not you, but others, when media talk about affordability
of house prices, they tend to focus on just two things.
They tend to focus on the house price and the
average household income. And based on those two measures, houses
(09:46):
in Auckland, for argument's sake, have gone from I think
four times household income in the year two thousand to
about nine or ten times income by about twenty twenty.
But that figure is actually spurious because it doesn't take
account of the third factor in that triumvirate, which is
the cost of money interest rates. The average interest rates
given time, and I've used an example before, but I'll
(10:07):
use it again to put these figures you have just given
me in context. Come back to nineteen eighty seven, And
you take the average household income in New Zealand And
by the average interest rate mortgage interest rate prevailing in
nineteen eighty seven, which was up around twenty odd percent,
and you look at the average house price in New
Zealand at that time. If you took all those three
(10:28):
things together and you put them into a melting pot,
they would have told you that at that time, in
nineteen eighty seven, the cost of servicing a mortgage in
New Zealand for an average household was about fifty two
percent of total household income, so over half of what
you actually earned. By mid twenty and eighteen, that figure
same thing, average household income, average house price, mortgage interest
rates at the same time. By mid twenty and eighteen,
(10:49):
that figure had dropped to thirty seven percent. So and
the reason that should come as a shock to people
is because if you asked people putting that aside, if
you said to people, the houses more or less expensive
in twenty and eighteen, they would have said much, much,
much more expensive because they were only looking at the
headline figure. But when you took all of those things
into account, it was actually cheaper to service and mortgage
in twenty eighteen than it wasn't nineteen eighty seven, or
(11:10):
indeed for several years after nineteen eighty seven. Now, the
reason I tell you all that is what's happened, what
these figures that you've just quoted to doing, is basically
taking those same factors into account and are saying, because
mortgage interest rates are now dropping, because there's been a
little bit of an increase in household incomes, and because
house prices have batantly flattened and bottomed out over the
last two or three years, we are in a more
(11:31):
benevolent space than we were in twenty twenty, which, without
actually analyzing figures, it's true, absolutely true for those reasons.
That will change. Obviously that will change over the next
few years is house prices go up, but it will
be moderated to some degree by the fact that mortgage
interest rates are coming down. So and it feeds into
a bigger issue, which is one I'm a great advocate of,
(11:51):
which is house priced increases are driven overwhelmingly more than
any other factor by the cost of money. House prices
go up when the cost of money comes down, and
that's what we're about to see over the next two
or three years.
Speaker 3 (12:03):
Yeah, because I wanted to tie it in too as well.
I mean to put our crystal ball. I was quite
surprised when I saw totally Alexander's piece about how much
can we expect house prices to rise over the next
thirty years. I've assumed that that's cumulatively is because at
the moment, the data shows that house prices in New
Zealand have risen on average seven point two percent a
(12:25):
year since nineteen ninety two, with Auckland prices rising eight
point two percent a year. And now Tony says, based
on a bunch of factors that he thinks that we're
going to see a change in that rate, that it
will instead rise between five and six percent for a
bunch of factors that he outlines in his piece.
Speaker 4 (12:44):
What's your take on that as well?
Speaker 3 (12:46):
Because just to put it in context, at six percent
growth over thirty years, a one million dollar house will
then be five point seven million, which still since like
all of a lot, doesn't it?
Speaker 5 (12:57):
So Interestingly, and with all due respect to a good mate, Tony,
I actually wrote almost exactly the same thing about three
years ago. But the reason you won't recognize the figures
is that I came at them from a different direction,
and I'll explain what I mean by that. So about
three years ago, because because I was bleeding away for
several for a couple of decades about the fact that
house prices double every ten years, and so I sat
(13:18):
down and thought, well, because I'd never actually analyzed it formally,
so I sat down and thought, well, I'd better actually
do this so if anybody asks me, I can actually
point to the numbers and show why I make that assessment.
And when I did that, I found that from nineteen
eighty to nineteen nineteen, nineteen ninety to two thousand, two
thousand to twenty ten, in twenty ten to twenty twenty,
for three of those four decades, house pricess had doubled
(13:39):
almost exactly within a ten year time frame. They'd gone
up by almost exactly one hundred percent, within about one
percent either way when averaged out over those decades. In
that last decade, though in that nineteen ninety twenty ten
to twenty twenty they had taken slightly longer term. That
actually taken twelve years. And the reason there's a range
of reasons for that, which I talked about at the time,
but basically, house prices will get that even though the
(14:01):
cost of money was coming down, the actual headline number
that you were paying to our house was higher, and
so it was physically more difficult for people to pay
a higher price. So that was slowing down the rate
at which house prices were increasing. Now, the reason that's
all relevant to what you've just asked me is if
you average out the average increase in the value of
a property per year in order to get it to
(14:21):
double over ten years, it's exactly seven point two percent
per year. So that's something they call a rule of
seventy two, which says that if house price is increased
by seven point two percent per year, they will double
ten years. Now, here's the interesting thing. If that slowed
down by the rate I indicated two or three years ago,
which was they were going to double over twelve years,
the rate of increase over that period was going to
(14:42):
be six percent per year, it's slightly slower. So it's
exactly the same figures as Tony's come up.
Speaker 3 (14:47):
Well, he's got Peace says five or six percent, I think, but.
Speaker 5 (14:50):
I'm saying six excent. I'm saying sex. Although it could
slow down a little bit further to five, but I'm
saying sex so I can't basically came to exactly the
same numbers that I arrived at them in quite a
different way.
Speaker 3 (15:01):
So I guess you know, you're looking thirty years out
and it does look you know, makes makes a half
million dollar house at six percent would be two point
eight million dollars. And it's difficult to imagine how what
our attitude towards money is going to be in thirty
years time, because just in today's standards, that just sounds like, what,
what do you mean a half.
Speaker 4 (15:20):
Million dollar house is going to be worth two point
eight million?
Speaker 3 (15:24):
I guess the thing is, do you think the question
that maybe as part of the looking ahead is do
you think that the property while it's more accessible and
it's more affordable now, do you think the property market
as where it's valued right now is about right? Because
I've spoken to people who think, well, to be honest,
given the state of our economy and all that sort
(15:45):
of thing, and the fact that FOMO has driven things
in the past and then cheap money, that we're still overvalued.
Speaker 4 (15:49):
What do you reckon?
Speaker 5 (15:50):
So firstly, let me just finish off what I was
going to say before with regard so that projection over finished, Yeah,
that's all right. So that article went on to then
say what will happen over and it actually talked about
the next fifty years, and it basically said that the
rate of doubling over each decade would be slower and
slow so, and the reason for that was because the
headline price that you were paying was less and less.
(16:12):
So whereas it was twelve years over the last decade,
it might be thirteen or fourteen over the next decade.
The one after that, it might be fifteen or sixteen years,
which means rate of increased per per year will reduce.
So whereas Tony saying four to five over the next
thirty years, I wasn't as ballish as that. I'm saying
it'll slow down. In fact, we might get to a
point by sort of two thousand and seventy, two thousand
and eighty, where you know, it only goes up by
(16:34):
one or two percent per year a year on year.
So kind of the same numbers up until now, different
trajectory going forward. But with regard to your questions, which is,
are they about right? There's no such thing. There is
no such thing as a property market where the prices
are about rather and the reason for that are that
there are a whole thing, There are a whole range
(16:54):
of things that actually drive house price growth, but primarily
the cost of money pushes house prices up. And so
as long as the cost of money goes up and
then comes down again, as it's just done, it will
always fuel another boom. So the fact that we've just
seen a massive increase in interest rates and then those
interest rates are coming down will absolutely, assuredly, without any doubt,
(17:16):
will fuel another house price boom, and house prices over
the next five to ten years to the point where
in the next whether it's twelve or thirteen or fourteen years,
house prices will be double what they currently are today.
That's just a fact, and that's not an opinion. I
can prove that with data, and I could show you
how that happens over a period of time. So there
really isn't a point where you would say house prices
(17:36):
are about right, because who's to make that determination. It's
completely subjective. What it comes down to at the end
of the day is what will the market do, And
the market will respond to the factors that are currently
at play, and the factors that are currently at players
that the cost of money's dropping.
Speaker 3 (17:49):
I guess I guess the reason I've always I mean,
you know, you're more of an expert on these things
than I am. But I guess the thing is when
you look at the economy and the fact that people
you know, New Zealand doesn't feel like it's particularly rocky
and rolling at the moment, and immigration is, you know,
in a reverse at the moment.
Speaker 4 (18:08):
It does.
Speaker 3 (18:09):
I don't know, one does feel that there's got to
be some level of economic activity in GDP and all
that sort of stuff.
Speaker 4 (18:16):
It has to in some way connect with what the
property market.
Speaker 5 (18:19):
So it's an interesting should ask that. So our property
house price booms have never been coupled to our economic
boom busts. Ever, so sorry, let me put that another way.
If they haven't been coincidental, and it's only been part
way toward the end of the beginning of a boom.
So what I mean by that is if you look
at when house prices have increased, they have had no
relationship to the wider economy booming or busting. And that
(18:44):
entire period, that forty year period that I talked about previously,
for no reason to believe that this will be any different.
So while it would be nice to think that house
prices go up at a time when we've got prosperity
and people are earning more, there doesn't that relationship doesn't
seem to exist.
Speaker 3 (18:57):
Okay, we might dig into this a little bit more.
We want your cause on this as well. E one
hundred and eighty ten eighty. So just your predictions really
of the property market. It's going to grow at a
slower rate. But I mean, I would have thought that
would have been inevitable in terms of percentages and how
quickly are relating to well Ashley would disagree with me
on this, but how quickly the economy is growing and
all that sort of thing. But anyway, Tony, like Alexander
(19:18):
has said, he expects property house prices to grow between
five and six percent wherein is in the past it's
been between seven and eight percent per year, and his
prediction being for the next thirty years. What do you
reckon I eight hundred eighty t and eighty. But also
do you think that given that core logic is showing
that we're at our best level of property affordability since
(19:39):
before COVID, is this pretty much it. This is the
sweet spot. If you want to get into the property market,
you need to do it now. I eight hundred eighty
ten eighty it's twenty six past four. News Talk said blows.
Speaker 6 (19:53):
Well, my name Seve, myself our set things you don't understand,
can take yourself.
Speaker 4 (20:18):
Guess.
Speaker 3 (20:18):
Welcome back to the one Routh radio show. I'm Tim Beverage.
My guest is an independent commentator at Ashley Church. We're
talking about is the are we at the sweet spot
at the moment with Apparently according to call logic, it's
shown that we're at the data is showing that we're
the best level of property affordability since before COVID. Is
this enough for you to decide if you're interested in
getting into property, whether it be as an owner, occupier
(20:40):
or an investor. Is this a sort of sweet spot
for you? Or are you a little bit sort of like,
oh well, I'm just you're still not there yet. And yeah,
we want your calls on eight hundred and eighty ten eighty.
Just a few texts Ashley before we get into it.
Just wondering what impact labor potentially reintroducing the inability to
(21:01):
claim interest for landlords would have that would have an impact, well,
government policy, let's just talk about that broadly, so.
Speaker 5 (21:08):
On investors, it will remember investors aren't While they're an
impact on the market, they're not the only pact, and
they're not the most significant impact on the market that
would be first turned buyers. So it'll have some impact.
But if you even it out or average, get out
across the whole market and look at its total impact,
you might be talking half a percent or one percent
in capital growth of each year over ten years.
Speaker 3 (21:27):
Yeah, one of the factors that Tony refers to because
you talked about it's just cheap money that drives a boom.
But of course, if the supply is there to meet
the demand, if we're building more houses. He's talking about
boomers selling up as they're trying to fund their retirement.
Is that a bit of a Is it a bit
of a handbrake on growth in the market in terms
of prices.
Speaker 5 (21:47):
That's an area where there's very few areas where Tony
and I disagree, But that's an area where Tony and I,
and infect Toniu and me and most other commentators disagree.
I'm sort of on my own, but I very strongly
of the view that suppli has got very little to
do with house prices. And the reason I say that
is that, and I haven't got the exact figure on me,
but from the MIDA through till about twenty twenty, we
(22:07):
had actually increased our total supply by about two hundred
and fifty thousand more houses than we actually required just
to stand still population wise, in terms of everage occupancy
made absolutely no difference the house process over that period
of time, they continued to go up.
Speaker 3 (22:21):
Do you think that the same emotions that drive people
with property, I guess would be my question that I
sort of felt, and I've had a chat with a
couple of other property people about this, that back in
the John Key days and around that, there was a
hell of a lot of the property was everyone's darling
if you can get into it. Leverage and Fomo drove
(22:41):
a lot of it. And I just wonder, if you know,
attitudes of buys, our attitudes towards a lot of things
change over the years. And I guess to me, I
mean the idea if there's more houses being built, if
we don't have these high levels of immigration, because that
was one of the things that was seen as being
(23:02):
fueling it as well, whether in fact that FOMA might
not reach the sort of fever pitch that we've seen
in the past. If the supply is there, I mean,
why would you be worrying about missing out if the
policies of the government are leading to more houses being
built and there's more coming on the market, because so
the boom is sewing up.
Speaker 5 (23:19):
So I can only repeat that that house price supply,
that housing supply has never been a factor. So if
you look at when the booms have been and when
supposed that what we're supply has been, those periods of
time has had virtually no difference at all, and equally,
and I hear what you say with regard to immigration,
but same applies. We've had really high house price inflation
and boom markets and property in New Zealand at periods
(23:39):
of time when our migration was virtually nell or even
going backward. And so yet to understand that and this
is only an opinion, but it's an informed one, you
kind of have to look back to why the property
was the darling of the sort of the investor classes.
And you've got to go right back to the late
seventies to Bob Jones, when Bob Jones was running property
investment seminars in New Zealand and publishing his box Jones
(24:02):
on Property and other publications on and he basically birthed
the property investment industry and he created a whole class
of property investors back in the early eighties it previously
didn't exist. Who went on to then create an even
bigger industry. And so what's happened over that forty year
period of time is that Kiwis have become in my view,
you know, this is a subjective, but in my view,
(24:22):
probably the most informed property investors on the planet. They
understand property better than most other nations. They understand how
it works. They've made it work for them. And the
reason for that is because New Zealand doesn't have what's
called deep capital markets. It doesn't have other places that
we can invest. We've got a share market, but it's
a pretty manky one. We don't have the sorts of
investment mechanisms that most other nations have got. So we've
(24:44):
tended to literally put all of our eggs in one
basket and invest it into property and it's worked well
for us. There A research study came out of two
or three years ago from I'm just trying to remember
who came from, basically saying the New Zealander is with
the fifth wealthiest nation on Earth when you took into
account their asset base, so it didn't mean that they
were necessarily better paid than other nations, but in terms
(25:04):
of their total wealth you're talking to account their property
as well, they were. They were the fifth wealthiest nation
on the planet, ahead of other nations that you might
think of as being much wealthy.
Speaker 3 (25:12):
I guess, yeah, sorry, Kara, I was just going to
say so.
Speaker 5 (25:16):
So I'm very firmly of the view that if what
you were saying is correct, then it would have to
it would have to be replaced by some other phenomenon,
it would have to be. So. The only time in
my lifetime that anything has replaced property it was during
the mid eighties when we had the shear market craze,
and if you'll probably remember it terms, some of the
listeners won't. That did not work out well for Kiwis.
(25:36):
That did not work out well. Lots of Kiwis lost
this well. Shoot.
Speaker 3 (25:39):
If ireed to play a devil's advocate, I would say
the property market back when money was really cheap didn't
work out because people overpaid and then they lost a
lot of money because they were three and then they
were spent a couple of million bucks on a house,
which you know, they.
Speaker 5 (25:52):
Still had these but they still had the asset term,
and that asset always recovered. So over time, that asset
recovered the value that they might have lost at that time.
That hasn't happened very often in forty years. Most times
when the market's dropped away, it's simply gone flattened there
for a while. So the trajectory of property in this
country as a pretty reasonable linear line upward, with a
couple of periods. One of those, well let me finish,
(26:14):
because this is important, one of those in the mid nineties,
and one of those again during the GFC, so you
can you can only and then of course during after
twenty twenty, so you can only point to three times
in that entire thirty year period where there's been a
backward trajectory in prices, and all three of those properly
not only recovered, but it went on to be worth
much much more. So you know, I'm not I mean,
it's not not my bag to defend it, but the
(26:36):
figures don't agree with what you're saying. The figures say
that it's been by far and away the safest form
of investment, and that's by Kiwis of State.
Speaker 3 (26:42):
Yeah, I think, I guess when you say that, we
look back and what was that figure about we were
the most the richest asset wise of one of the
top five or something.
Speaker 4 (26:51):
What was that figure that you mentioned.
Speaker 5 (26:54):
We were remain the top five? We were the fifth
wealthiest nation on earth about.
Speaker 3 (26:59):
Yeah, I think that the question would the instinctive response
I'd have that would be like, well, clearly we were overvalued,
because what do we have going in our economy apart
from that that would make property that valuable? Was it
a nominal value that we were all busy friends frantically
(27:19):
trading with each other and pumping the value up when
in fact, with you looked at the value of the
whole New Zealand economy, it was giving an artificial view
of what we were worth. Because I just I guess
I'm trying to find a simpler way to put it
that it wasn't Underpinman but any other economic data.
Speaker 5 (27:36):
I understand your point, but who makes that determination? Who
says that something's overvalued? Property is worth what people are
prepared to sell and buy for. So, because I've heard
this term before about being overvalued, and with all due
respect to you, it's a term that people make without
actually really understanding what's actually going on within that market.
If people are prepared to sell for that amount and
commenturately pay for that amount, that's what that's worth. Now.
(27:58):
If that then went backward, if it was like the
tulip boom and Holland or Ostrich eggs or whatever, and
those things ultimately crashed and went back with then you
might have a point with that, but they haven't. So,
as I say, with the exception of those three periods
of the last thirty odd years where there's been a
correction in the market, or on all three of those occasions,
it then went back to where it was before and
then continued on on its trajectory. And so then the
(28:20):
next argument that people put to me is, oh, well
it's not sustainable. Well, how long do you judge sustainability
over because we've had forty years of this, and that
forty years has worked out pretty well for people that
have invested in this particular asset over what period of
time you know, I mean, people have been born and
died over that period of time. So for me, if
you're looking for something that's actually going to work, and
I sound like I'm defending this thing and it's not
(28:40):
here nor there to me whether people buy property or not.
But for me, if you look at this asset over
the last forty years, it's been incredibly safe and that's
why key Wes have stuck with it.
Speaker 3 (28:48):
I mean, well, actually we'll dig into a bit more
of this after the breakbit. We'd love your cause on
this O E. One hundred and eighty ten and eighty
Do you agree with Ashley that you know it is
what it's worth and it's I'm trying to sum up
your stance. Actually it's difficult because you've spent a while
explaining it and so I don't want to do it
to disservice by just a couple of sentences. But yeah,
if you've been listening to actually do you agree with
what he's saying about the value of the property the
(29:10):
property market? Do you think actually also do you think
right now what we're seeing is the most affordable it's
going to be? And give us a call on eight
hundred and eighty ten eighty text nineteen nine two back
in a month having blas to.
Speaker 6 (29:22):
Have value that a little.
Speaker 3 (29:32):
To Key's Welcome back to the one Roufredia show. My
guest is Ashley Church and we're chatting about just the
state of the market and what we think is going
to happen over the next sort of ten twenty thirty years.
Tony Alexander has predicted that the rate of house price
growth will change from what has been seven or eight
(29:53):
percent of depending on whether you're a nationwide or auckland,
to around five and six percent, and he's explained where
he thinks that the restraining factors that will kick in there. Actually, Ashley,
what is holding in is back at the moment because
they don't seem to be piling into the market.
Speaker 5 (30:07):
Do they cost of money and confidence?
Speaker 4 (30:10):
And do you see that changing much?
Speaker 5 (30:12):
Yes, to do so. Confidence is returning now and cost
of money is coming down. If I was to mention
a third factor, it would be that the impact of
higher interest rates has pulled a lot of them in
to pretty straightened conditions over the last three or four years,
so some of them are recovering from that. But the
three are into related. When the cost of money comes down,
that will restore confidence and it will improve their current position.
Speaker 3 (30:31):
So when you say cost of money and confidence, you
just mean cost of money then, because if one if
confidence results from the cost of money, then that's all
it's about, is it.
Speaker 5 (30:40):
Well, no, that's a good question actually, because you could
argue that, I mean, who knows where the sweet spot is,
but you could argue we might have already got past
the sweet spot in terms of the cost of money.
So then it comes down to whether investors have got
confidence that the Reserve Bank's going to stick with that
trajectory where the monetary policy is going to continue that way,
or whether it might reverse again. So that's where confidence
kicks in. And there's been a bit at that over
(31:02):
the last year with Awas saying something and then six
months later doing something different. So that's that's the impact
of confidence. People saying well, yes, cost of money is
coming down, but I need to be absolutely certain it's
going to stay down.
Speaker 3 (31:12):
Do you think that the policies of the government when
it comes to enabling more development in other words, a
lot more houses being built, you know, opening up patches
of land for developers to get stuck into, do you
think that plays much of a partner, because I mean
that's the old Kensian supply and demand thing, which you
don't sound like you're quite such a fan of the
Kensian economics on this one.
Speaker 5 (31:33):
Not on this one. I mean, I believe in Kensi
and not economics in a general sense, but when it
comes to property, and it's not about me being a
fan of it, it's just that the data doesn't support it.
The data tells us. I mean, I've had conversations with
Chris Bishop on this, because he's very much in that
camp of if you build well, you know, you build it,
they'll come. The data just doesn't support it. The data
shows that when we build more houses it makes no difference.
When we build less houses, it makes no difference. It's
(31:55):
primarily about the cost of money.
Speaker 3 (31:56):
Are there other factors that are in there at play
when we build more houses though, such as if we're building, say,
I don't know, fifty thousand more houses a year, but
we've got an immigration rate of two hundred one thousand people.
Speaker 4 (32:06):
You can understand.
Speaker 3 (32:07):
So what I mean is is it are we looking
at those figures taking into account other factors that might
be influencing it, like the population growth or decrease or increase.
Speaker 5 (32:17):
Well, again, as I say that, some of the periods
of biggest house price boom, I'm just thinking of the nineties,
for example, and again in the two thousands were at
periods when our migration was either static or in a
couple of cases, actually going backward. So there doesn't seem
to be a direct and obvious causal link between the two.
And I know that's counterintuitive, but the reason for me
(32:40):
it's because the cost of money is such a big
factor over and above and I think if you think
about that, think about it if you're an investor, and
if you're an investor, but you're looking at ten, fifteen,
twenty years for your property and what in confidence that
it's going to go up and value over that period
of time, and making sure that the cost of it's
not going to be so much that you're going that
you're going to be able to continue to afford to
sustain the mortgage. And that's a far bigger fact to
(33:02):
you than what we might be going on in the
economy right now.
Speaker 3 (33:05):
What about with at the moment, it feels like the
rental market's a bit soft, and so there was a
time when you know, if you are in a property investor
and you had a property rent, you'd have people fighting
over and of course good properties will always have competition
for people to rent it, but it doesn't feel that
that's the vibe right now, and there seems to be
a bit more flexibility and people are able to pick
and choose a bit more. Does that affect investor confidence
(33:25):
when it comes to the market.
Speaker 5 (33:26):
That's a really interesting one because I mean, if I
look back over the last ten years, and it only
needs to be a reten year period, look at the
period of time when people have said the market soft
versus the markets the rental market, software sus the rental
markets fall on. That can come and go within a
period of six or seven months, so that can turn
really quickly. You'll find that, you know, there'll be and
there's all sorts of reasons for that because it differs
(33:47):
in different communities. But the regional agencies you'll be saying, hey,
look it's a really soft time at the moment, we
haven't got good tenants. Three months later you'll come back
and talk to the same agency on they say, we
haven't got enough stock. We need to get more because
people are wanting to rent so the things that drive that.
A they're regional and situational, and B they can and change.
Speaker 4 (34:05):
On a dime.
Speaker 5 (34:06):
So those aren't Those aren't the sorts of things that
soft now it's still going to be soften a year.
Speaker 3 (34:11):
Your involvement in the property market, now, I mean, you
commentate on all sorts of things, but what's your involvement.
Are you sort of you've had you've done your days
of buying and selling, or do you still sort of
dabble a bit.
Speaker 5 (34:21):
I've certainly done my days of buying and selling. Still
got a few properties get slowly moving out of the market.
Not in any huge hurry because I'm very confident about
the market over the next five or six years, but
more of an observer now. But my big thing's always
been and I mean, you know, that's one of the
reason I've always appreciated the opportunity to talk to you.
So he's been about the numbers around it. It's not
so much around you know, for a lot of investors,
(34:42):
it's the excitement of the push and pull of the market.
For me, it's always about the numbers, and it's always
it's all that stuff that's counterintuitive, And I've i guess
I've focused him over the last you know, probably ten
years on looking to see what the data says versus
what you know common wisdom says. And often those two
things aren't the same. In fact, the lots of case
two things, well they're not. And so it's fascinating because
(35:04):
because on the one hand, and you'll have people there's
almost like an urban mythology around property investment, which will
say four or five things, and when you analyze those
four or five things, you'll often find that the data
see something quite different.
Speaker 3 (35:15):
We've got a text here from Jak says, actually he's
not taking into account astronomical rates and insurance increases. No
one and Wellington will be able to afford insurance in
a few years. As rates and insurance are doubling every
five and ten years, our insurance is doubled in three years,
it will affect property prices.
Speaker 4 (35:29):
He's quite right.
Speaker 5 (35:30):
Yeah, he's absolutely right. Wellington in particular is I mean,
it's a basket case and the sooner an election can
come in Wellington, the council you've currently got tossed out
because it's a disaster. So no, he's absolutely right. Insurance
to a lesser degree insurance is sort of comes and
goes as effective. But rates in Wellington right now are
criminal and that's going to need to be dealt with
(35:52):
by a summer re election and get rid of the
muppets at the current word.
Speaker 3 (35:55):
Now, they've got a lot to spend, They've got a
lot of they've got to spend a lot of money
on quite a few things.
Speaker 4 (35:58):
I guess.
Speaker 3 (35:59):
So I can't imagine those rates coming back and hurry,
can you?
Speaker 5 (36:02):
Well, I can't, but the speed, the rate at which
they increase could yeah.
Speaker 3 (36:05):
Yeah, right, we'll be back in a moment. The one
Roof Property of the Week is next. It's twelve minutes
to five news Talk s'b es News Talk z B
with Tim Beverage Chan right now it is what is it?
Eight minutes two.
Speaker 1 (36:17):
Five the one roof property of the week on the
Weekend Collective.
Speaker 3 (36:24):
Yes, the one roof Property of the Week, don't forget.
You can go to the One Roof for a website
to check it out. It is nine to nine Old
North Road y Mocal in Rodney. Four bedrooms, four bathrooms,
three car garage, twenty additional off street park off street parks.
And that's probably explained by the fact that the land
is eight point three hectares, it's built in ninety seventy
(36:45):
ninety ninety six.
Speaker 4 (36:46):
Sorry, and look it's it's.
Speaker 3 (36:48):
Not one You're just going to probably buy it for
a first house, unless you get the winning lotto ticket,
and even then you might still want to leave a
little bit more cash left over. It's estimate is at
six and a half million dollars. It is crafted with
meticulous attention to detail. Interiors evoked the ambience of a
high end boutique hotel, and just having a look at it.
I always love to just go by the photos, but
(37:10):
it's always a bit tricky for radio. But the gardens
and the pool, well there's a bit of there's a
bit of effort that goes into that garden. Actually is
the sort of you've hat to look at him jashly, we'll.
Speaker 5 (37:23):
Just very tusk and looking. I sort of imagine there
must be vineyards attached to this thing as well. It's beautiful.
Speaker 3 (37:27):
What I was thinking is that if you have the
purchase price, and I mean the interior is are magnificent
as well, aren't they. But that gardens, even if your
mortgage free, I think I don't know what your gardening
bill would be, but it wouldn't be just a case
of paying someone a hundred bucks to come into mow
the lawns what it.
Speaker 5 (37:44):
No, you'd need a full time garden and pool boy
and whatever else. It looks like there's a stable there
as well, So maybe a stable end.
Speaker 3 (37:51):
Actually in terms of because I'm looking at the interior
of it and the tiling and the sort of mosaic
tiling and the hallway, and it's just it does seem
absolutely immaculate. Actually, I know it's a lot of money,
but for six million bucks, and you can see where
the money has been spent, can't you.
Speaker 5 (38:09):
It's I was thinking, I used to watch Falcon Crest
in the eighties. It's kind of that sort of home
modern for the modern era.
Speaker 3 (38:15):
It's beautiful Falcon Crest in the eighties.
Speaker 4 (38:18):
Good lord, Falcon Crest. What was that? Where was that set?
Speaker 3 (38:23):
I guess it was a place called Falcon Crest?
Speaker 6 (38:24):
Was it?
Speaker 5 (38:25):
It was del Dallas esque?
Speaker 4 (38:26):
It was.
Speaker 5 (38:27):
I think it was a different tween. We're trying to
do a knockoff of Dallas, so i'd had that sort
of feel to it.
Speaker 4 (38:31):
Okay, was that sort of the budget version of Dallas.
Was it Falcon? I do remember the name of it.
Speaker 5 (38:36):
Budget?
Speaker 4 (38:36):
What's that?
Speaker 5 (38:37):
I don't know if it was all that budget, but yeah,
they lived in a house that was not unlike this
from memory.
Speaker 4 (38:43):
Yeah it is pretty magnificent. I always think these things.
Speaker 3 (38:45):
It's fun looking through the sort of posh houses in
a way because it's like any bit of a holiday.
Do you still sort of do you still still serve
property sites looking at various properties like this? Do you
ever sort of go I might ever looked at a
few properties and take yourself for a.
Speaker 4 (38:59):
Little bit of a visual holiday.
Speaker 5 (39:01):
I only want to talk to you, Tim.
Speaker 4 (39:04):
The sun has.
Speaker 3 (39:04):
Always show and when you're talking to me, Ashley, oh hey,
so what actually what's what's your next sort of venture
with it? So you're basically just keeping taking things easy
with property. But you're doing plenty of writing and opinion
work on things, aren't you.
Speaker 5 (39:18):
You're doing a lot of political commentary these days instead
of talking about what's happening in the international world scene
as well as New Zealand and really enjoying that. It's
probably I mean I had a great time with property
for a long time, and you know, I really enjoyed
that and but sort of my interest have moved as
they do. I'm sixty one now, so I'm sort of
becoming a grumpy old man and everything.
Speaker 3 (39:37):
So spring checking, well, we won't we won't talk about
the politics dis because it does the property out, but
there's certainly plenty of de peak your interest on that.
Go and have a look at how are they selling
this house on the one roof site deadline sale. There
you go. You've got two weeks to get, twelve days
to get your bit in, so there you go.
Speaker 4 (39:56):
Hey, good to talk to you, Ashley. Thanks mate, Yeah, yeah,
look forward to it. That is Ashley Church.
Speaker 3 (40:02):
And if you want to check out the conversation we've had,
which was well, it was an intense covered a few
topics there on the just where the property market's going
and what we can expect over the next few years,
and it's always a good information if you're thinking maybe
now it's the time to get into it as well.
Go and check out Tony Alexander's piece on the one
(40:22):
roof side as well. And of course the report from
core Logic around affordability, which is showing that affordability has
hit its best level since twenty nineteen is probably something
you want to check out, if you've been thinking about
it's time to get into the market or not. Anyway,
we'll be back next with the Parents Squad. Catherine Burkett's
(40:43):
with us talking about how old your kids should be
allowed to stay at home, for, how long they should
stay at home, when's it time to kick them out,
among other things that will be next to the Parent Squad.
Speaker 4 (40:53):
It is four minutes, two five.
Speaker 6 (41:05):
Put them.
Speaker 1 (41:28):
For more from the Weekend Collective. Listen live to news
talks it'd be weekends from three pm, or follow the
podcast on iHeartRadio.
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