August 15, 2026 • 41 mins
In the property market we often focus on who's winning between the buyer and the seller, but an economist from Simplicity has calculated that renters could be the top dogs at the moment.
But, Ed McKnight from Opes Partners questions the reliability of this claim.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News TALKSB.
Speaker 2 (00:20):
And welcome in, Welcome back if you have just joined us. Well,
if you've just joined us, you're late. You're an hour late,
but you can go and check catch up on any
hours after sex o'clock. Just go and check out the
podcast on news Talks hebi website or on iHeartRadio on
tim beverage. This is the one roof radio show where
we talk, where we talk a bunch of things to
do with property. By the way, after five o'clock, Manish
(00:41):
Divas with us for the parents squad, talking about you know,
when do you stop monitoring your kids? In this digital
age where you can do quite a bit of monitoring,
when should you sort of back off a bit mum
and dad. But right now, as I say, it's a
one roof radio show and a reminder in a sort
of generous, sort of inviting sense that you don't have
to have the answer to the meaning of life. You
just have to have to want to join the conversation.
(01:01):
You might have a question for our guest or an
opinion on what and we're certainly inviting opinion with this one.
On ten and eighty text nine two. Now there's often
you know, over the course of the One Roof radio show,
there's been a lot of talk about historically it's like
properties are no brainy, You've got to get in there
(01:23):
and all that sort of thing. And there was a
time when it used to double. The market used to
double every eight years. And I was chatting to someone
recently you said, you know that perhaps though back back
in the stock market crash, which I can actually remember,
not vaguely, and you can't talk yet, haven't introduced you
the a lot of people put off shares for a lifetime,
(01:45):
and as there a generation of people who look at
what's happened in the property in the last few years,
and it's also made them a little bit once bitten
twice shy. But there's been an opinion written by an economists,
I think a Shimaboo jakeb who has positive the notion
of renters. But here we go. Renters quote could be
up to seven one hundred thousand dollars better off than
(02:07):
first home buyers. Now, there are a few assumptions that
are made in this, but it's just with the changing
landscape of property. And look, there was a time when
you can't argue with the nature of how good an
investment property was if you could just get your leverage
going and buy the right property and just sit and wait.
But things are slower, it's not as sexy these days.
(02:29):
Have been a few people who are sitting on houses
that are worth less than what they paid for them.
But I mean, is renting a better option potentially? I
think one of the things that my guests too on
Vetter induced at the moment, because he is championing at
the bit, will point out that there is some assumptions
that are made here, and one assumption is don't just
(02:50):
rent and not do anything else with your money. You
have to do something with that money. But anyway, joining
us he is, do we still call him resident economists
at Op's Partners, Ed McKnight, do we still call you that?
Speaker 1 (03:02):
Ed?
Speaker 3 (03:02):
Well, we still call it that. But I mean, the
thing it's a much is't we should get rid of
that resident you know, because what does that really mean?
I think I just gave myself at that one point
in time to try and make the South sound fancy
than I really am.
Speaker 2 (03:14):
It's not the resident builder is Pete wolf Camp. You're
the resonant economist.
Speaker 3 (03:17):
Oh well, actually, I quite like a Pete Wolfcamp if
I'm compared to him in any way or shape or form.
I'll take that as a wonderful compliment. Now, sorry for
butting in before, but I don't really believe that you
would remember the nineteen eighty seven sheer market crash.
Speaker 2 (03:31):
You're not that old.
Speaker 3 (03:32):
That's very kind of you'd be seven years old or
something at that point.
Speaker 2 (03:35):
Well, let's just roll with that.
Speaker 3 (03:37):
Well, it's funny that you should bring up the assumptions, right,
because I saw this piece of analysis where Shammibier was
saying that Renters could be up to seven hundred k
better off. And so I said to Susan the journalist, Susan, ca,
you send me that spreadsheet because I'd love to have
a wee look see at that. And it is a
Claude special. Of course you can tell it's a Claude
special because I've never seen any economists color code the
(04:00):
little tabs at the bottom of the Excel spreadsheet. And
every time Claude out puts a spreadsheet, they've got little
underscores in the title. So it is a claud special.
So it would have been nice if the if the
specific article had said that it was AI created. So
AI thinks that in certain situations, renting could be better
off than buying. But there are some specific assumptions in
(04:22):
here that I really want to point out just how
ridiculous they are.
Speaker 2 (04:25):
Wow, hot take, It's like I was almost going to
go around.
Speaker 3 (04:30):
I haven't even started yet. So let me give you
an example. In the high scenario in Chamberville's spreadsheet, they're
assuming that insurance costs are going to go up by
fourteen point one percent per year. Now, that is on
average what they've done over the last ten years. But
what that means is that by the year twenty ninety seven,
the annual insurance premium would be more expensive than the
(04:53):
entire house. So for house costs seven hundred thousand dollars today,
does anyone's day's Does anybody actually believe that you'd be
paying seven hundred thousand dollars a year for your annual
insurance insurance premium?
Speaker 2 (05:07):
No one would hope, Not one would hope.
Speaker 1 (05:09):
Not.
Speaker 3 (05:09):
Now I just point that out to say that the
spreads she doesn't predict that far.
Speaker 2 (05:13):
Just started gently with one small floor. Heres like I've
spotted a little detailed for it. That's why I said
started out.
Speaker 3 (05:21):
Well, the other thing that's really interesting when people do
these analyses is typically they run it over thirty years. Now,
why would you do that if you want it if
you worked for a managed fund company ie Simplicity, and
you wanted shares to look particularly good, you do that
because one of the main benefits of property is that
after thirty years, you've paid off your mortgage and then
your costs go down substantially, right, And so what you
(05:43):
do is you end it after thirty years, because then
you cut out that benefit of having paid off the mortgage, right.
And so, for example, when I've done this analysis in
the past, I typically run it over forty years, because
what you want to capture is that after your mortgage
goes down, you've got the ability to invest quite substantially
and other investments as well, and this completely cuts out
that major benefit of paying off a mortgage, right, because
(06:04):
you can flow substantially improves. The other thing you want
to do if you want to make renting look particularly
good compared to owning a house, is you assume that
property values are going to go up nowhere near like
they have in the past. So, for example, in the
default scenario, he assumes three percent if we look at
the ten year average, like he's applied to some other areas.
Auckland property, sorry not Auckland. New Zealand property prices up
(06:28):
four point four percent over the last ten years. So
what you do is you make property look really bad,
put a bad assumption in there, and then you put
a really aggressive assumption. And for shares, that's exactly what
you do, tim if you want to make renting look
particularly good compared to owning a house.
Speaker 2 (06:41):
There's a couple of things that he wouldn't be the
only one who's present predicting three percent per auntum for
property going ahead? Is he that? I mean, I've heard
that number a few times.
Speaker 3 (06:51):
So if you go back over all of the good
data that we've got in New Zealand and you say,
if you buy a house and you held it for
ten years, and let's assume that your property followed the
market perfectly, do you know what percentage of times property
went up by three percent per year over a ten
year period? Like, how often would that happen?
Speaker 2 (07:10):
Oh, well, it probably hasn't happened.
Speaker 3 (07:12):
In the New Zealand market zero percent of the time.
Now if you go down to an individual like in Vericago, whatever,
it happens occasionally, right, But I'm just saying that that
if I wanted to make property look really good, I
would use aggressi assumptions for property and not aggres and
very conservative assumptions for shares. And this way it comes
(07:34):
around the it's the opposite. Now, of course, if you
work for a fun management company, that's what you're going
to do. But all I'm saying here is the good
user Shemmer Bill didn't even create the spreadsheet AI did,
so we can all blame it on AI. By the way,
I'm not trying to knock the guy, right, but I'm
just saying that some of us. I mean, it's a
very fine economist.
Speaker 2 (07:51):
No, no, no, I.
Speaker 3 (07:52):
Was only my YouTube videos recently, Tim I was talking
about one of his books that I actually really really like.
But you've got me going now, and I really care
about assumptions. And the whole reason I'm trying to come
across and talk about these assumptions is that if your
mum and dad sitting at home reading the Herald or
thankfully this wasn't actually reported in the Herald, so so
go the.
Speaker 4 (08:11):
Herald but.
Speaker 3 (08:13):
You don't. You don't necessarily know that that. Oh this
is the reason why shares or renting has come out
so much better here, because we've assumed that rents won't
go up as fast as they have in the past,
and we're going to assume that insurance keeps on going
up at a really good clip. And we're going to
assume that that property values don't go up as much
as they have in the past. But oh, she is, Yes,
we're going to assume that goes up really quickly. You
(08:34):
wouldn't You wouldn't understand that, Ryan. So the real risk
is that somebody makes a really important financial decision based
on a headline which was actually relatively faulty.
Speaker 2 (08:44):
I think. I guess the thing is it's about the
assumptions that are contained therein but maybe the broader piece that.
Speaker 3 (08:51):
It's coming a bit hot.
Speaker 2 (08:52):
Sorry, Tim, you've come in really hot. No, I love it.
This is great, This is fantastic, one hundred eighty, ten
and eighty on a scale of one to ten. How
hot is ed mcna? Actually it's an interesting You've raised
so many interesting points. I'm trying to keep up. But
(09:14):
the first broader picture would be would you, I would
say that based on what I'm hearing you say, if
I was paraphrasing that, you know, charma Bill is it's
like a piece of economy. It's like an advocate's economics advocacy,
in other words, sort of advocating for a particular point
(09:36):
of view by putting together a set of propositions rather
than standing back and doing what I mean, that's trying
to understand how economics works because everyone's got their records,
their reckons, and how do you find where the good
economic predictions are going to come from? Because they're all
based on certain assumptions. But if he's working on the
(09:57):
basis of sort of trying to encourage people's attitude towards shares,
then that does that influence the advocacy?
Speaker 3 (10:03):
Well, look, I mean I would all always make it
about the analysis as opposed to the person, because you're
the very very fine economist.
Speaker 2 (10:10):
This analysis is not trying to make a point.
Speaker 3 (10:12):
But what I would say is that it's very easy
as an economist to make a headline. I've done this
my south. So all you do is you come up
with a scenario that says, you know, because I could
go to a journalist tomorrow and have different assumptions, say
exactly the opposite thing, and get it published as well,
because the future is inherently uncertain, so journalists love to
(10:33):
publish whatever US economists happened to think. So if I
was to predict a share market downturn tomorrow, then I
would be able to get that published in any publication
because it's a big negative prediction. If I was to
go out and predict that the share market was going
to keep on going up and up and up, nobody's
going to publish that because it's neither big nor scary.
Speaker 2 (10:54):
Do you see what I am?
Speaker 3 (10:56):
But can you believe anyone's reckons when it comes to forecasts,
not really, whether it's mine or any other economists right,
because economists are often wrong. I'll give you an example.
I once went back and I looked at all of
the banks house price forecasts from twenty sixteen onwards. And
then what I did was I got a random number generator,
(11:18):
and I said, could my random number generator beat the
bank economists? Now it didn't beat A. N z's economists,
but it did beat asb's economists, which I was quite tlack.
Speaker 2 (11:28):
You explain that to me, How does that work.
Speaker 3 (11:30):
So all I did was look at how fast house
prices have gone up in the past, and you know,
the average might be six or seven percent, and sometimes
it's higher than that, and sometimes it's lower than that.
So I got a random Excel number generator to pick
whereabouts it might be. And because property prices swing up
and down depending on unforeseen events that might happen, m
(11:50):
a random number generator which didn't know any of that,
was slightly more accurate than some of the bank's economists.
Which is just to say that any house price predictions
out of any of the major banks, not to knock them,
it's just to say this stuff is really hard to
get right, and often economists get them wrong. Now, of
course I'm saying that as an econombus, so I count
myself as one of those people that are often wrong.
(12:11):
But I think it's important that people remember that when
we put out our reckens. Of course we will base
it on what's happening today, But you don't know what's
going to happen tomorrow.
Speaker 2 (12:20):
Do you No. Actually, I think one of the things
you raised there is I think the problem is how
much of the past behavior of the market, because you
asked me, you know, how often in the past ten
years has been an interest rate increase on average incrementally
a three percent per annum. You see. Look, I'm just
(12:40):
a guy who hosts a proper radio but I have
spoken to a lot of people who say that those
assumptions and logically, to me, the assumptions of percentage growths.
It's like with insurance costs. You know, we don't. It's
not sustainable for insurance to grow at that rate. But
the argument that people used to sit in that chair
and say, well, the property market doubles every eight years,
(13:02):
that's not sustainable. It's just impossible. You cannot have exponential
growth in that way, which would mean that the example
you gave of four and a half percent or something.
I mean, looking back, how much of the backward data
is worth anything at the moment?
Speaker 3 (13:16):
Well, I'll tell you how.
Speaker 2 (13:17):
I have a question. It's a great question.
Speaker 3 (13:19):
It's a really good question and something that I'm pretty
hot on at the moment. So one of the things
that I'm really warning about is at the moment is
only looking at the past ten or twenty years of
growth right for basically anything. And the reason behind that
is if you say, look at property prices at the
(13:39):
moment you go the last ten years was four point
four percent.
Speaker 2 (13:43):
Now, the.
Speaker 3 (13:46):
Tempting thing to do is to say, well, that's what
happened over the last ten years, that's what's going to
happen over the next ten years. But if you're thinking
about well, how much of house price has gone up
on average over the last ten years, all you're doing
is looking at two data points. What are house prices
today and what were house prices ten years ago. And
of course, if you created the ten year long term
(14:07):
growth rate at the peak of the market, you would
get a very very high compounding growth rate. If you
took that at the bottom of the market, you would
get a very low compounding growth rate. So the thing
that I like to do is look at look back
with as much data as possible, and say, well, if
we look at a whole heap of ten year periods,
so January nineteen ninety two and compared to January two
(14:30):
thousand and two, and then what about February nineteen ninety
two to February two thousand and two, and so on
and so forth, and say well, what tends to happen
over at the average ten year period. Now, I wanted
to give you a couple of numbers that are quite interesting.
If we look at the S and P five hundred
over the last thirty four years, right right now, if
(14:50):
we looked at the last ten years, the S and
P five hundred has appreciated thirteen point one percent. Now,
how often over a decade it's gone? Really mental, hasn't it?
Speaker 2 (14:59):
Now? How often.
Speaker 3 (15:01):
On average every year of the last ten years. That's
why everybody's hot shares at the moment, because people have
made a lot of money, and good on them for
doing it.
Speaker 2 (15:08):
Are you hot on shares?
Speaker 3 (15:09):
I am? I am hot on shares. I'm also hot
on property. I'm hot on Yes, yep, I'll take that
from you.
Speaker 2 (15:17):
Go look at guy. I'll take it. But I'm sorry,
but wife's listening to the show, so I'm lo there. Now.
Speaker 3 (15:25):
What's interesting is only five percent of the time has
the S and P five hundred delivered that enormous thirteen
percent return over any given ten year period. And so
the thing that I'm pointing out to people is this
seems like an unsustainably high rate of return. I'm not predicting,
but you're.
Speaker 2 (15:42):
Raising the question that you're raising a question, It's like, Okay,
we can find a window where it goes bonkers, but
if you rely on that for your future investment strategy forever,
then you need to be careful about that. But just
to pick up on something you said, because I think
the advice you've you've sort of deliberately and inadvertently given
is you know, you've got to be careful about looking
(16:03):
backwards for these there was something I'm getting my head
loss with all these myriad of thoughts, but it was
it was based on just, Oh, it's really important when
people read this stuff because these are big decisions people
can make on a headline one percent. And that's the
thing that applies also to the property market as well,
(16:24):
when people say, oh, doubles every eight years, and you've
got people who in twenty twenty thought, oh, it's on file,
let's get into it. And so I guess the jewel
in the crown that comes out of just even what
we've said so far is you've got to be careful
about headlines.
Speaker 3 (16:38):
Oh one hundred percent right. And one of the headlines
that you should read recently was about Cotality's wonderful Pain
and Gain Report. This is probably one of the most
important reports that come out about the New Zealand property market,
and what they show is that if you group, if
you split all of the people who sold their house
over the last three months into two groups, people who
(17:01):
sold their house for less than they bought it for,
and people who made money who sold their house for
more than they bought it for. The people who lost
money on average held their property for just under five years.
The people who made money from selling their house, who
sold it for more than they bought it for, on average,
they held their property for about ten to eleven years.
(17:21):
And so the reason I like to put that in
your head is that if you were one of those
people who bought just on the headline, wow, property is
going mental, I better go and buy a house. Well,
that's where I see that you are more likely to
sell for a loss really quickly because you didn't get
that quick return you were hoping for. But if you're
staying in the market for ten, eleven, twelve years, you're
(17:42):
much more likely to get the return that you're hoping for.
But you've got to do it not just based on
any headline.
Speaker 2 (17:47):
Year. Gosh, we'd love your calls on this. There's some
other stuff we're going to get on into on the
show as well. But so this article that talked about
could renters be seven hundred thousand dollars better off than
first time buyers according to a calculation based on certain assumptions.
I mean, is that something that appeals to you or
do you what does it make you feel as the
(18:08):
first time buy? What's what's your reaction to that? I
do know people who do make a decision that they're
going to rent and they invest the hell out of
their business and they're very successful. But that's because I mean,
I guess they're investing full stop, which is a good
you know, making money work for you when you're when
you're sleeping. So what do you reckon of that eight
hundred and eighty ten eighty? I'll also come back because
(18:31):
Ed has said that it looks like it's got all
the hallmarks of a claud spreadsheet that timber Bell's done.
And so I've actually popped the article from Marion zed
in to chat GPT and it's even said there are
two or three assumptions that are worse worth putting pushing
back on quite strongly. So dig into that. But also,
how do you look at the history of the property
(18:53):
market to inform you how many of you actually do
that or do you just go with the zeitgeist the
spread of the time. You heard somebody say, oh, look
you've got to get into property. Oh okay, that was
sort of actually funny enough how you sort of got
in in the end, wasn't it.
Speaker 1 (19:06):
Ed?
Speaker 2 (19:06):
Somebody said, come on, Ed, yea shopping for a house?
Speaker 3 (19:09):
Yeah, we we're going to shop for a house to borrow?
Speaker 2 (19:11):
And well did that? We want your We want your
calls as well. We'd love you to join us. I
know we've thrown a lot out there, but you know
Ed was on fire, So let's get It's twenty six
past Forward News Talks a B, News Talks A B
(19:32):
and with Ed McKnight, we're talking about the piece that
was written saying that rents could be better off than
first time buyers based on certain assumptions. And actually I
won't go into the whole chat GPT thing, but the
points that Ed has raised about the assumptions around insurance
and rates increases and stuff their big calls to make.
But anyway, we want your reckons on it because it's
(19:53):
also a question around how do you look at past
data and make your decisions about buying and selling and
all that sort of thing. What you're involved in the
market's going to be Dean high Dean, Hello, how on
a second, I'll just checked that you your vader is up?
Hold it, I need to check the volume for Dean
is up because we haven't got the caller down it.
It's just me talking to my producer because for some
(20:13):
reason we can't hear Dean. That's weird, Dean, I can't hear.
So I'm just going to go to another caller and
I'll know if it's not working if I can't hear Ben.
Ben Hello, No, we oh, we gotcha.
Speaker 3 (20:25):
You've ever got Ben or Dean here today?
Speaker 2 (20:28):
Ben? Good day mate? Where you go years?
Speaker 5 (20:30):
I was speaking to you a few weeks ago. So
the wife's are inherit at a rental. Now we're very
consumed because well you're talking about is it bet at
a rent or buy? Well, I'll draw your attention to
Australia at the moment. So they've changed their negative gearing
for the capital gains tax and if you held the
(20:51):
property over a year, you'd get a fifty percent discount.
So we'd come down from thirty percent to fifteen now
they've taken that out from next year, and the Australian
Property brokers associations reporting ours of managed rentals just in
Melbourne hitting the market and being snapped up by Airbnb
(21:12):
and corporations for short term holiday accommodation, and it's driving
up rents dramatically, like some of them are seeing the
twenty percent increase in rents in the last six months
due to the capital Gains tax increases that come in
next year. So yeah, I'm very concerned, like we're looking
(21:32):
at flicking off the rental property and anticipation that we
get a change of government this year and the CGT
comes in. Because you just look at the tax changes
that are happening over there, that's what they want to
bring in over here, and it's really bad over there
at the moment. So we'll give you in Australia.
Speaker 3 (21:53):
The negative gearing changes that Australia is bringing in. We've
actually had those in for the past seven years. Just
sinder our doing brought those in from April twenty nineteen,
and so I definitely agree with what you're probably saying
that you would likely see a number of Australian landlords
convert across to airbnbs, that would likely increase increase rents
(22:15):
for rentals because you've got less supply. But the specific
the specific tax change you're talking about in terms of
neggative gearing, we've actually had that for seven years, so
it'd be hard for them to bring that in again.
But I understand what you're saying around the capital gains tax.
One other thing that's quite interesting over there in the
Australian market is that any property that was already purchased
(22:37):
before the budget came out is going to be grandfathered
in with the old rules, and so it's probably going
to be unlikely that we see a lot of the
rental properties come on and sell, because if you're a
landlord and you get to keep all of these old
tax rules and they haven't actually been changed on you,
then you'd be you're less likely to sell it because
(22:57):
then you can never get those tax benefits back, whereas
if you keep on holding onto that rental property, you
keep those tax benefits for until the government gets to
change their mind again. And so you'll likely see a
sort of lock and effect where Australians are probably won't
sell their properties because they want to maintain those tax advantages.
But let me ask you this, what's most concerning you
(23:20):
from a New Zealand perspective, that's making you think I
might go ahead and sell that rental we've just inherited.
Speaker 5 (23:26):
Because it's got a mortgage on it currently and we
don't make money off the weekly rent. We actually have
to top it up about five to six thousand bucks
a year. And well we've kept it low, but it's
below market rent. We probably should up it. But even
if we up it, we're still not going to break
even on it. So we're looking at a capital gain
(23:49):
gainly now profit.
Speaker 3 (23:51):
Yeah, I mean that's very normal into in today's market. Right,
the average rental property has about a four and a
half percent gross yield average one year rate.
Speaker 2 (24:00):
What's that about?
Speaker 3 (24:01):
Four eight four point nine percent, So lots of property
investors are topping up their rentals at the moment, especially
if you own in one of the biggest cities. But
I can understand that if you're not into that, then
all good, it might be the right thing for you
to sell.
Speaker 2 (24:16):
Yeah, well, good luck with it, Ben, Thanks for your
col mate. Actually, I do have a quite a funny
text here just about economists and general says Tim. Economists
have predicted nineteen of the last two recessions.
Speaker 3 (24:27):
I'm surprised it's only nineteen, right.
Speaker 2 (24:31):
Anyway, let's take some more calls about this. I know
we sort of we've got lots of questions around this,
but the essential question is, you know about have you
reconsidered your stance on investment that given the you know,
the ideas that some people people are putting out that
you'd be better off renting than buying a first time.
So I got to say, it's not a message I'll
(24:52):
be given to my kids. I'll be like, well, you know,
I want you to get into a house when you
can afford it, because I still think you know that
there's a percentage value that attaches to rents and to property,
and I'd rather that you actually get in there by
having a stake.
Speaker 3 (25:05):
Well, you've got to remember as well. Every time the
Retirement Commission comes out talking about in zed super, they
always say in zed super is based on the idea
that people own their own homes, and now going forward,
not as many people might own their own homes when
they are sixty five, and they're going to do it
really tough in retirement. Again, one of the best benefits
(25:25):
of owning your own home is eventually that mortgage is
gone and your costs go to down to just the rates,
maintenance and insurance. That wasn't captured in this piece of analysis.
Speaker 2 (25:37):
Right, Let's let's go to Dean.
Speaker 4 (25:39):
Get a Dean, Yeah, get a tim A question for
By the way, this is not a new idea. I
remember hearing about this in the nineteen thirty years ago timing.
Speaker 2 (25:51):
Look, we've discussed it even I know we've discussed this
theme even within the last year or so, but this
has just put it out in a bit more of
a bolder fashion. So yeah, get into it, Dean. What
do you reckon?
Speaker 4 (26:01):
Well, I have a question for you. It might be
a bit tangentle, and I apologize for that, But during
the COVID times from say twenty twenty to twenty twenty three,
there was a massive increase in property prices in New Zealand.
And I think there are a couple of factors that there.
Correct me if I'm wrong. At any point. One, there
was a lot of cheap money too. There was a
(26:21):
lot of pressure on house purchases mainly and sorry mainly
partially driven by coying Aurora busy being active in the
market and trying to meet the government's requirements that house
people and social and so on. From your point of view, ed,
was that a responsible action by the government with the
Reserve Bank to allow that situation to happen, because seriously,
(26:41):
there are must be tens of thousands of people in
this country that are now in a negative equity situation
because property prices were grossly inflated during that time. Or
am I just living in cald Cuckoo.
Speaker 3 (26:51):
Land, Ronald, there's a great question, Mar I'm a little
bit of a Reserve Bank apologist, and what I mean
by that as I think they were generally trying to
do the best that they could at the time with
the knowledge that they had. You got to remember, the
Reserve banks modeling at the time was that if they
didn't step in change the LVIR restrictions lower interest rates,
(27:13):
that property prices could fall. In one of their models,
it was up to like twenty twenty five percent. Now
obviously over the last over the last two years or
so or three years if you're in Auckland, that's actually eventuated.
But property prices across New Zealand are still up about
twenty percent from where they were pre COVID. If you're
an invocago, you'll be really happy because they're up actually
(27:35):
twenty two percent since the bottom of the market. But
I do look a little bit kindly on the Reserve Bank,
because although they likely did keep interest rates too low
for too long, it's very easy to say that in retrospect,
and they were dealing, especially in the early parts of
the COVID pandemic, with something that none of us had
really seen before, and what ended up happening was, at
(27:58):
least here in New Zealand, we managed to deal with
the virus much better than most other parts of the world.
And on top of that, consumer spending ended up holding
up relatively well because when we were all sitting at home,
we were all saving up more money. Then we came
out and we started spending more on our houses because
we actually saved for once rather than going out and
(28:18):
spending it. And so I just kind of think it's
really easy in retrospect to say, oh, the Reserve Bank
did so many, so many things wrong.
Speaker 2 (28:28):
But I'm not.
Speaker 3 (28:28):
Sure if you put Adrian or in the Reserve Bank
assistant and Deputy governors back in the same position with
the same knowledge, they'd likely make the same decisions. But
that might be naive of me, Dean, What do you reckon?
Speaker 4 (28:41):
Yeah, I think you had being noise. I think that
the Reserve Bank got plenty of feedback very early on
in the peace, like'd say, halfway through twenty twenty early
twenty twenty one, that the stimulus wasn't required, the spending
was carrying on increasing and that sort of thing, And
suddenly the government had that information and they should have
acted quicker to turn the taps off to stop the
(29:01):
bubble from getting to the point that it got to
in late twenty twenty one twenty two, and then we
wouldn't have tens of thousands of people in a negative
equity situation because the team would have been taken out
of the housing market. And I think that they should
have known them, the government and the Reserve being you know,
that's what feedback leaves are for, right, and they had
all that information, they could see that spending was holding up,
and they took no action. It seems to me.
Speaker 3 (29:23):
Yeah, yeah, I think you've probably got a point around
around not necessarily you know, was it okay that they
brought their interest rates down probably, but perhaps they should
have raised them sooner.
Speaker 2 (29:32):
Yeah, and government spending obviously they're probably you know, obviously
those are political arguments that chris Hip Prince would like
us to forget about, I imagine. Anyway, Look, we've got
another question we're going to get into as well after this,
just about about property investors, and it just ties into
the whole thing. You know, the idea that anyone invests
(29:53):
in property is just a greedy fat cat or are
they just people who are preparing for retirement? Who is
it that makes about property investment population. We'll dig into
that as well with Ed. I think he's got some
hot takes on this as well. He is absolutely sizzling today.
It's twenty minutes to five News Talks. He'd be yes
(30:22):
News Talk, said be indeed were with Ed McKnight. There
is something else, by the way, we want to talk
about because one of the things that there's been a
bit of talk, you know, there's a lot of demonization
that goes on when it comes to the property market
on who's you know, why are people in this for?
You know, who's in it for the money? And all
this sort of stuff, And there's a lot of agro
(30:42):
around branding each other, whether we be a rent or.
It's like the tenancy the tenant, the landlord's versus tenants,
investors versus first time buyers, and it's got to take
on this but a greed. Are all property investors just
greedy fat catshid because I'm sure there be a lot
of people listening going yeah.
Speaker 3 (30:59):
Well, of course I'm going to say no, because I'm
a property investor. I've got a company that helps people
become property investors. But I tell you what I did.
Speaker 2 (31:05):
And you're quite slim too. Oh well, I'll take that.
Speaker 3 (31:07):
I mean, it's only a recent development, isn't it.
Speaker 2 (31:09):
But I'll take that.
Speaker 3 (31:11):
So what I did was I really wanted to understand
what's the motivation behind property investors. Now, we create financial
plans wealth plans for property investors every single week in
my company Opens Partners. So I analyze all four three
hundred and eighty one that we've created over the last
two years to find out how much do property investors
(31:31):
want to spend in retirement? What are some of their motivations?
And I thought that i'd greet to you some of
the things that people have actually said that we've just
released in our Open's Partners What Investors Want report and
my favorite quote that somebody's written in as they said,
they don't want to be the richest people in the graveyard.
They just want to enjoy their lives. They're not looking
to be land barons. And what we see is that
(31:54):
the average property investor who we work with is aiming
to spend about one hundred thousand dollars in retirement. Right,
so that's probably about two point three times souper. Now,
if we look at that one hundred k retirement and
where that money comes from, about forty four thousand dollars
is going to come from ENNZ.
Speaker 2 (32:11):
Super all right.
Speaker 3 (32:13):
On top of that, most people have got a KIWI save.
Speaker 2 (32:15):
I do the number again, what's one hundred thousand?
Speaker 3 (32:17):
So one hundred thousand dollars is what the average property
investor couple wants to spend in retirement.
Speaker 2 (32:22):
Spend what do you mean for the total? No? Per yeah,
per yuh yeah, one hundred that one hundred k per
year yah, so two or three million.
Speaker 3 (32:30):
And so what we've what I did was I said, well,
where's that one hundred k going to come from? And
in these actual financial plans that people have created with
financial advisors. About forty four percent of that spending comes
from enz Super. Another eighteen percent comes from Kiwi Saver.
So if you look at the average person who comes
in and wants that plan, and how much Key We
Saver they've got, and what their income is and what
(32:53):
funds they are in, and you make all of these assumptions,
then you say, okay, about eighteen percent off that's going
to come from Kiwi Saver. That leaves about a thirty
eight thousand dollars a year gap, which is what they're
trying to use property for.
Speaker 2 (33:05):
Which I only point that out to.
Speaker 3 (33:06):
Say the average property investor is not looking to sweeten
the deal for themselves a bit. They're trying to make
their retirement a little bit better. But do you know
what's interesting to now when we ask property investors, well,
what are you wanting out of retirement, it's not going
to surprise you to say that about fifty seven percent
of them say travel, right, But when you look in
(33:28):
and try and understand, well, why do they want to travel?
Where do they want to travel? And I actually read
what real mums and dads in New Zealand have written
into their goal section. When they're creating a financial plan.
They're not looking to lie on a beach in Fiji.
What they're wanting to do is go to the UK
to see their daughter who moved over there, has shacked
up with a brit now and has got some grandkids.
(33:50):
They want to fly back to see their family in
South Africa because they moved over here to find a
better life, and they want to go see their pearans
before they carket. It's actually really just like quite basic
things that all of us want. It's not that they
want ten properties.
Speaker 2 (34:05):
That actually resonates with That resonates with me because you
think as time goes on, what you know, the idea
of your kids moving overseas. I think I like it
having a conversation with this because I do get and
it's something that politicians play the game all the time.
And I'm sorry, but the Greens play it with you know,
regards to property investors and you know, tax breaks for
the landlords and all this sort of stuff like that.
(34:26):
But because part of the whole dishonesty around the political
discussion is branding people is inherently bad and playing this
moral superior they are bad people and stuff, and in
fact that doesn't when it's in fact, it'd be interesting
to know from people who are listening. When you list
that out in you the reasons you've given it all
resonates because you sort of think, if I was to
(34:48):
buy an investment property, why would I do? It? Would
be maybe also to help my kids when I carket
as well.
Speaker 3 (34:55):
Carck it such a charming well, I'll give you a
couple of other things that people are looking for. Another
person wrote in that they want to be able to
go to the grocery store and not worry too much
about what they're putting in their can't because if we
look at the messy university retirement expenditure guidelines, which is
a wonderful report about what people actually spend. If you're
(35:16):
on what they call the no frills lifestyle, you and
your wife as your couple, your budget for fruit and
vegetables for a week would be about twenty eight twenty
nine dollars. Now, I'm not sure how I've actually seen
you just outside the supermarket at our local at est
tim if I'm allowed to say that on end, Now
everybody knows we didn't go to the supermarket. It's expensive
(35:38):
to buy stuff you know, a cucumbers. It's like, what
six dollars I think I saw the other days outrageous
what it can.
Speaker 2 (35:44):
Be, I think, to be honest, I think that the
thought of how much you can have in a retirement
generally ter terrifies many people, regardless of unless they're completely loaded.
If you've just won twelve million in latter you probably
feel the stress lift a little bit, but it doesn't
take much to suck up a bit of extra income.
If you decide all and maybe I want to do
it can be a couple of really simple things you
(36:05):
want to do, or things just in terms of the
way you manage your diet or your exercise or your lifestyle.
Want to do a little bit of travel. It's amazing
how quickly you can kiss gold buy the money.
Speaker 3 (36:14):
Or even if you want to get a camper van
and go around the country, that could cost you, I
don't know, like eighty ninety thousand dollars. I've seen people
spend on those kinds of things. Obviously even more we're
probably talking at the cheaper end. Another person wrote in
just saying that they wanted to be able to turn
the heater on without feeling like they are penny pinching
from some other budget. And so that's the reason people
(36:35):
do it. The other stant I'll just give you tim
if we've got time for it, is that the average
landlord is not looking to buy ten properties. Fifty percent
of investors are aiming for two to four investment properties,
and the average one is just looking for three investment properties. Now,
that's still a good sized portfolio, right, But it's not
property investors just wanting to get as wretch as possible
(36:58):
or buy as many properties as possible. They just want
to be able to turn the heater on, go and
see their grandkids while they're still able to, and put
the corn chips in their shopping basket without worrying whether
they've got the extra five dollars to pay for it.
Speaker 2 (37:10):
Personally, I would still like the ability to maybe just
have my own personal helicopter PADU.
Speaker 3 (37:16):
Well, yeah and me both. We're gonna have to become
mates with the Zulu founders, aren't we.
Speaker 2 (37:21):
Borrow your pad? Anyway? Hey, look, we've got the property
week coming up in just a moment, and I look,
I know we do this by description, but I'll let
you know the address when we come back, and you
can be standing by with you because it's a gorgeous property.
It is a really it's the sort of property you'd
(37:41):
be thinking, now that's me, that's got a bit of
me all over it as an investment or maybe just
somewhere to hang out when you've got a bit of
spare time. It's ten to five news talks. He'd be
welcome back. And now it is that magic time. We've
got quite a special property here, So it's time for
the now. If you've been listening to the past hour,
(38:07):
you know that Ed McKnight, our guest today, has got
some fairly hot takes.
Speaker 1 (38:10):
Now.
Speaker 2 (38:10):
The property itself is one seven nine Shoal Bay Road
and Great Barrier Island. Seven bedrooms, seven bathrooms, floor area,
floor area eight thousand. Now there's a tip ground area.
There's a ground area eight thousand square meters. Built in
nineteen seventy. It's a built in lushnted bush. It's got
(38:31):
it's a triphena harbor, direct water access and I guess
if you're looking for that direct water access, maybe that's
where their value is. But it's it's Pigeons Lodge if
you want to google that, and I think it's basically
hosted guests and everything. So it's probably sort of being
sold as a business, possibly because it says plus GSTFNY.
(38:52):
But it's a lot of money. Actually, it's close to
a couple of million bucks. What did you what did you?
What's your hot take on this?
Speaker 1 (38:58):
Ed?
Speaker 2 (38:58):
I look at it thing.
Speaker 3 (38:59):
Oh, it's a bit rough as guts, isn't it. I mean,
if it was in the seventies, you'd say, oh, how
modern this? But I do think you know telling me
he's dreaming at two million barks.
Speaker 2 (39:09):
I mean, not that I.
Speaker 3 (39:10):
Know anything about the great Great Barrier Island property market.
I don't think if you ever looked at it, But
I just think for two million backs, you buy a
hell of a nice, nice property over over this side.
Speaker 2 (39:21):
Of of what what?
Speaker 3 (39:24):
What ocean is that You've got the tessment on one
side Pacific Ocean.
Speaker 2 (39:28):
Isn't it. I don't know that you're about to throw
me a curveboard now.
Speaker 3 (39:33):
On the side of the Pacific, I think you'd probably
get something quite nice. And and what was that property
we looked at that time out by the prison. That
was a really nice house.
Speaker 2 (39:45):
Yeah, it wasn't too far from a prison, and so
that was one of the things that might have had
a bit of a lit on its value. Look, it's
an interesting one because it's obviously it must be getting
its value because you're going to, you know, put a
bunch of guests up and make some money out of that.
But the building itself, it's it's a little old, looks
like it needs maybe a liquor paint. But it's setting
is where the money must be, wouldn't it surely?
Speaker 3 (40:06):
Oh yeah, the said I mean the set is beautiful.
The house, therey mid mid you know that one. That's
what the kids sometimes say as Oh it's not very good,
it's just average.
Speaker 2 (40:16):
Yeah, I prefer that the castle quite what how much?
Telling me he's dreaming. But anyway it is they reckon
it's one. The asking price is one nine four nine
one point nine million, one point nine to five million,
basically rounding it up a but plus gst if any
which is interesting, which I don't know how that works
when it comes to if you're buying it just as
a home or whether you're buying it as a going concern. Anyway,
(40:38):
you can ask your account in that question. But it
is a beautiful area though, it's worth just having a
look just to see the beautiful setting. And of course
Great Barrier Island a duel, you know, not too far
off the coast of Auckland, of course, a little bit
of a flight.
Speaker 3 (40:51):
Only about thirty minutes.
Speaker 2 (40:52):
That's okay, okay, Hey, ed boy, I'm exhausted. You were
on fire this afternoon. It's good, good work, young man.
Oh thanks mate, when I'll see you the next tider bag. Hey,
thanks for your feedback everyone, and we'll be back with Manish.
Diva is next for the parents squad, talking about well,
you know, Wend you have to take the little you know,
take the foot off the accelerator of tracking your kids,
(41:13):
among other things. Back soon
Speaker 1 (41:26):
For more from the Weekend Collective, listen live to news
Talks EDB weekends from three pm, or follow the podcast
on iHeartRadio
You're listening to the Weekend Collective podcast from News TALKSB.
Speaker 2 (00:20):
And welcome in, Welcome back if you have just joined us. Well,
if you've just joined us, you're late. You're an hour late,
but you can go and check catch up on any
hours after sex o'clock. Just go and check out the
podcast on news Talks hebi website or on iHeartRadio on
tim beverage. This is the one roof radio show where
we talk, where we talk a bunch of things to
do with property. By the way, after five o'clock, Manish
(00:41):
Divas with us for the parents squad, talking about you know,
when do you stop monitoring your kids? In this digital
age where you can do quite a bit of monitoring,
when should you sort of back off a bit mum
and dad. But right now, as I say, it's a
one roof radio show and a reminder in a sort
of generous, sort of inviting sense that you don't have
to have the answer to the meaning of life. You
just have to have to want to join the conversation.
(01:01):
You might have a question for our guest or an
opinion on what and we're certainly inviting opinion with this one.
On ten and eighty text nine two. Now there's often
you know, over the course of the One Roof radio show,
there's been a lot of talk about historically it's like
properties are no brainy, You've got to get in there
(01:23):
and all that sort of thing. And there was a
time when it used to double. The market used to
double every eight years. And I was chatting to someone
recently you said, you know that perhaps though back back
in the stock market crash, which I can actually remember,
not vaguely, and you can't talk yet, haven't introduced you
the a lot of people put off shares for a lifetime,
(01:45):
and as there a generation of people who look at
what's happened in the property in the last few years,
and it's also made them a little bit once bitten
twice shy. But there's been an opinion written by an economists,
I think a Shimaboo jakeb who has positive the notion
of renters. But here we go. Renters quote could be
up to seven one hundred thousand dollars better off than
(02:07):
first home buyers. Now, there are a few assumptions that
are made in this, but it's just with the changing
landscape of property. And look, there was a time when
you can't argue with the nature of how good an
investment property was if you could just get your leverage
going and buy the right property and just sit and wait.
But things are slower, it's not as sexy these days.
(02:29):
Have been a few people who are sitting on houses
that are worth less than what they paid for them.
But I mean, is renting a better option potentially? I
think one of the things that my guests too on
Vetter induced at the moment, because he is championing at
the bit, will point out that there is some assumptions
that are made here, and one assumption is don't just
(02:50):
rent and not do anything else with your money. You
have to do something with that money. But anyway, joining
us he is, do we still call him resident economists
at Op's Partners, Ed McKnight, do we still call you that?
Speaker 1 (03:02):
Ed?
Speaker 3 (03:02):
Well, we still call it that. But I mean, the
thing it's a much is't we should get rid of
that resident you know, because what does that really mean?
I think I just gave myself at that one point
in time to try and make the South sound fancy
than I really am.
Speaker 2 (03:14):
It's not the resident builder is Pete wolf Camp. You're
the resonant economist.
Speaker 3 (03:17):
Oh well, actually, I quite like a Pete Wolfcamp if
I'm compared to him in any way or shape or form.
I'll take that as a wonderful compliment. Now, sorry for
butting in before, but I don't really believe that you
would remember the nineteen eighty seven sheer market crash.
Speaker 2 (03:31):
You're not that old.
Speaker 3 (03:32):
That's very kind of you'd be seven years old or
something at that point.
Speaker 2 (03:35):
Well, let's just roll with that.
Speaker 3 (03:37):
Well, it's funny that you should bring up the assumptions, right,
because I saw this piece of analysis where Shammibier was
saying that Renters could be up to seven hundred k
better off. And so I said to Susan the journalist, Susan, ca,
you send me that spreadsheet because I'd love to have
a wee look see at that. And it is a
Claude special. Of course you can tell it's a Claude
special because I've never seen any economists color code the
(04:00):
little tabs at the bottom of the Excel spreadsheet. And
every time Claude out puts a spreadsheet, they've got little
underscores in the title. So it is a claud special.
So it would have been nice if the if the
specific article had said that it was AI created. So
AI thinks that in certain situations, renting could be better
off than buying. But there are some specific assumptions in
(04:22):
here that I really want to point out just how
ridiculous they are.
Speaker 2 (04:25):
Wow, hot take, It's like I was almost going to
go around.
Speaker 3 (04:30):
I haven't even started yet. So let me give you
an example. In the high scenario in Chamberville's spreadsheet, they're
assuming that insurance costs are going to go up by
fourteen point one percent per year. Now, that is on
average what they've done over the last ten years. But
what that means is that by the year twenty ninety seven,
the annual insurance premium would be more expensive than the
(04:53):
entire house. So for house costs seven hundred thousand dollars today,
does anyone's day's Does anybody actually believe that you'd be
paying seven hundred thousand dollars a year for your annual
insurance insurance premium?
Speaker 2 (05:07):
No one would hope, Not one would hope.
Speaker 1 (05:09):
Not.
Speaker 3 (05:09):
Now I just point that out to say that the
spreads she doesn't predict that far.
Speaker 2 (05:13):
Just started gently with one small floor. Heres like I've
spotted a little detailed for it. That's why I said
started out.
Speaker 3 (05:21):
Well, the other thing that's really interesting when people do
these analyses is typically they run it over thirty years. Now,
why would you do that if you want it if
you worked for a managed fund company ie Simplicity, and
you wanted shares to look particularly good, you do that
because one of the main benefits of property is that
after thirty years, you've paid off your mortgage and then
your costs go down substantially, right, And so what you
(05:43):
do is you end it after thirty years, because then
you cut out that benefit of having paid off the mortgage, right.
And so, for example, when I've done this analysis in
the past, I typically run it over forty years, because
what you want to capture is that after your mortgage
goes down, you've got the ability to invest quite substantially
and other investments as well, and this completely cuts out
that major benefit of paying off a mortgage, right, because
(06:04):
you can flow substantially improves. The other thing you want
to do if you want to make renting look particularly
good compared to owning a house, is you assume that
property values are going to go up nowhere near like
they have in the past. So, for example, in the
default scenario, he assumes three percent if we look at
the ten year average, like he's applied to some other areas.
Auckland property, sorry not Auckland. New Zealand property prices up
(06:28):
four point four percent over the last ten years. So
what you do is you make property look really bad,
put a bad assumption in there, and then you put
a really aggressive assumption. And for shares, that's exactly what
you do, tim if you want to make renting look
particularly good compared to owning a house.
Speaker 2 (06:41):
There's a couple of things that he wouldn't be the
only one who's present predicting three percent per auntum for
property going ahead? Is he that? I mean, I've heard
that number a few times.
Speaker 3 (06:51):
So if you go back over all of the good
data that we've got in New Zealand and you say,
if you buy a house and you held it for
ten years, and let's assume that your property followed the
market perfectly, do you know what percentage of times property
went up by three percent per year over a ten
year period? Like, how often would that happen?
Speaker 2 (07:10):
Oh, well, it probably hasn't happened.
Speaker 3 (07:12):
In the New Zealand market zero percent of the time.
Now if you go down to an individual like in Vericago, whatever,
it happens occasionally, right, But I'm just saying that that
if I wanted to make property look really good, I
would use aggressi assumptions for property and not aggres and
very conservative assumptions for shares. And this way it comes
(07:34):
around the it's the opposite. Now, of course, if you
work for a fun management company, that's what you're going
to do. But all I'm saying here is the good
user Shemmer Bill didn't even create the spreadsheet AI did,
so we can all blame it on AI. By the way,
I'm not trying to knock the guy, right, but I'm
just saying that some of us. I mean, it's a
very fine economist.
Speaker 2 (07:51):
No, no, no, I.
Speaker 3 (07:52):
Was only my YouTube videos recently, Tim I was talking
about one of his books that I actually really really like.
But you've got me going now, and I really care
about assumptions. And the whole reason I'm trying to come
across and talk about these assumptions is that if your
mum and dad sitting at home reading the Herald or
thankfully this wasn't actually reported in the Herald, so so
go the.
Speaker 4 (08:11):
Herald but.
Speaker 3 (08:13):
You don't. You don't necessarily know that that. Oh this
is the reason why shares or renting has come out
so much better here, because we've assumed that rents won't
go up as fast as they have in the past,
and we're going to assume that insurance keeps on going
up at a really good clip. And we're going to
assume that that property values don't go up as much
as they have in the past. But oh, she is, Yes,
we're going to assume that goes up really quickly. You
(08:34):
wouldn't You wouldn't understand that, Ryan. So the real risk
is that somebody makes a really important financial decision based
on a headline which was actually relatively faulty.
Speaker 2 (08:44):
I think. I guess the thing is it's about the
assumptions that are contained therein but maybe the broader piece that.
Speaker 3 (08:51):
It's coming a bit hot.
Speaker 2 (08:52):
Sorry, Tim, you've come in really hot. No, I love it.
This is great, This is fantastic, one hundred eighty, ten
and eighty on a scale of one to ten. How
hot is ed mcna? Actually it's an interesting You've raised
so many interesting points. I'm trying to keep up. But
(09:14):
the first broader picture would be would you, I would
say that based on what I'm hearing you say, if
I was paraphrasing that, you know, charma Bill is it's
like a piece of economy. It's like an advocate's economics advocacy,
in other words, sort of advocating for a particular point
(09:36):
of view by putting together a set of propositions rather
than standing back and doing what I mean, that's trying
to understand how economics works because everyone's got their records,
their reckons, and how do you find where the good
economic predictions are going to come from? Because they're all
based on certain assumptions. But if he's working on the
(09:57):
basis of sort of trying to encourage people's attitude towards shares,
then that does that influence the advocacy?
Speaker 3 (10:03):
Well, look, I mean I would all always make it
about the analysis as opposed to the person, because you're
the very very fine economist.
Speaker 2 (10:10):
This analysis is not trying to make a point.
Speaker 3 (10:12):
But what I would say is that it's very easy
as an economist to make a headline. I've done this
my south. So all you do is you come up
with a scenario that says, you know, because I could
go to a journalist tomorrow and have different assumptions, say
exactly the opposite thing, and get it published as well,
because the future is inherently uncertain, so journalists love to
(10:33):
publish whatever US economists happened to think. So if I
was to predict a share market downturn tomorrow, then I
would be able to get that published in any publication
because it's a big negative prediction. If I was to
go out and predict that the share market was going
to keep on going up and up and up, nobody's
going to publish that because it's neither big nor scary.
Speaker 2 (10:54):
Do you see what I am?
Speaker 3 (10:56):
But can you believe anyone's reckons when it comes to forecasts,
not really, whether it's mine or any other economists right,
because economists are often wrong. I'll give you an example.
I once went back and I looked at all of
the banks house price forecasts from twenty sixteen onwards. And
then what I did was I got a random number generator,
(11:18):
and I said, could my random number generator beat the
bank economists? Now it didn't beat A. N z's economists,
but it did beat asb's economists, which I was quite tlack.
Speaker 2 (11:28):
You explain that to me, How does that work.
Speaker 3 (11:30):
So all I did was look at how fast house
prices have gone up in the past, and you know,
the average might be six or seven percent, and sometimes
it's higher than that, and sometimes it's lower than that.
So I got a random Excel number generator to pick
whereabouts it might be. And because property prices swing up
and down depending on unforeseen events that might happen, m
(11:50):
a random number generator which didn't know any of that,
was slightly more accurate than some of the bank's economists.
Which is just to say that any house price predictions
out of any of the major banks, not to knock them,
it's just to say this stuff is really hard to
get right, and often economists get them wrong. Now, of
course I'm saying that as an econombus, so I count
myself as one of those people that are often wrong.
(12:11):
But I think it's important that people remember that when
we put out our reckens. Of course we will base
it on what's happening today, But you don't know what's
going to happen tomorrow.
Speaker 2 (12:20):
Do you No. Actually, I think one of the things
you raised there is I think the problem is how
much of the past behavior of the market, because you
asked me, you know, how often in the past ten
years has been an interest rate increase on average incrementally
a three percent per annum. You see. Look, I'm just
(12:40):
a guy who hosts a proper radio but I have
spoken to a lot of people who say that those
assumptions and logically, to me, the assumptions of percentage growths.
It's like with insurance costs. You know, we don't. It's
not sustainable for insurance to grow at that rate. But
the argument that people used to sit in that chair
and say, well, the property market doubles every eight years,
(13:02):
that's not sustainable. It's just impossible. You cannot have exponential
growth in that way, which would mean that the example
you gave of four and a half percent or something.
I mean, looking back, how much of the backward data
is worth anything at the moment?
Speaker 3 (13:16):
Well, I'll tell you how.
Speaker 2 (13:17):
I have a question. It's a great question.
Speaker 3 (13:19):
It's a really good question and something that I'm pretty
hot on at the moment. So one of the things
that I'm really warning about is at the moment is
only looking at the past ten or twenty years of
growth right for basically anything. And the reason behind that
is if you say, look at property prices at the
(13:39):
moment you go the last ten years was four point
four percent.
Speaker 2 (13:43):
Now, the.
Speaker 3 (13:46):
Tempting thing to do is to say, well, that's what
happened over the last ten years, that's what's going to
happen over the next ten years. But if you're thinking
about well, how much of house price has gone up
on average over the last ten years, all you're doing
is looking at two data points. What are house prices
today and what were house prices ten years ago. And
of course, if you created the ten year long term
(14:07):
growth rate at the peak of the market, you would
get a very very high compounding growth rate. If you
took that at the bottom of the market, you would
get a very low compounding growth rate. So the thing
that I like to do is look at look back
with as much data as possible, and say, well, if
we look at a whole heap of ten year periods,
so January nineteen ninety two and compared to January two
(14:30):
thousand and two, and then what about February nineteen ninety
two to February two thousand and two, and so on
and so forth, and say well, what tends to happen
over at the average ten year period. Now, I wanted
to give you a couple of numbers that are quite interesting.
If we look at the S and P five hundred
over the last thirty four years, right right now, if
(14:50):
we looked at the last ten years, the S and
P five hundred has appreciated thirteen point one percent. Now,
how often over a decade it's gone? Really mental, hasn't it?
Speaker 2 (14:59):
Now? How often.
Speaker 3 (15:01):
On average every year of the last ten years. That's
why everybody's hot shares at the moment, because people have
made a lot of money, and good on them for
doing it.
Speaker 2 (15:08):
Are you hot on shares?
Speaker 3 (15:09):
I am? I am hot on shares. I'm also hot
on property. I'm hot on Yes, yep, I'll take that
from you.
Speaker 2 (15:17):
Go look at guy. I'll take it. But I'm sorry,
but wife's listening to the show, so I'm lo there. Now.
Speaker 3 (15:25):
What's interesting is only five percent of the time has
the S and P five hundred delivered that enormous thirteen
percent return over any given ten year period. And so
the thing that I'm pointing out to people is this
seems like an unsustainably high rate of return. I'm not predicting,
but you're.
Speaker 2 (15:42):
Raising the question that you're raising a question, It's like, Okay,
we can find a window where it goes bonkers, but
if you rely on that for your future investment strategy forever,
then you need to be careful about that. But just
to pick up on something you said, because I think
the advice you've you've sort of deliberately and inadvertently given
is you know, you've got to be careful about looking
(16:03):
backwards for these there was something I'm getting my head
loss with all these myriad of thoughts, but it was
it was based on just, Oh, it's really important when
people read this stuff because these are big decisions people
can make on a headline one percent. And that's the
thing that applies also to the property market as well,
(16:24):
when people say, oh, doubles every eight years, and you've
got people who in twenty twenty thought, oh, it's on file,
let's get into it. And so I guess the jewel
in the crown that comes out of just even what
we've said so far is you've got to be careful
about headlines.
Speaker 3 (16:38):
Oh one hundred percent right. And one of the headlines
that you should read recently was about Cotality's wonderful Pain
and Gain Report. This is probably one of the most
important reports that come out about the New Zealand property market,
and what they show is that if you group, if
you split all of the people who sold their house
over the last three months into two groups, people who
(17:01):
sold their house for less than they bought it for,
and people who made money who sold their house for
more than they bought it for. The people who lost
money on average held their property for just under five years.
The people who made money from selling their house, who
sold it for more than they bought it for, on average,
they held their property for about ten to eleven years.
(17:21):
And so the reason I like to put that in
your head is that if you were one of those
people who bought just on the headline, wow, property is
going mental, I better go and buy a house. Well,
that's where I see that you are more likely to
sell for a loss really quickly because you didn't get
that quick return you were hoping for. But if you're
staying in the market for ten, eleven, twelve years, you're
(17:42):
much more likely to get the return that you're hoping for.
But you've got to do it not just based on
any headline.
Speaker 2 (17:47):
Year. Gosh, we'd love your calls on this. There's some
other stuff we're going to get on into on the
show as well. But so this article that talked about
could renters be seven hundred thousand dollars better off than
first time buyers according to a calculation based on certain assumptions.
I mean, is that something that appeals to you or
do you what does it make you feel as the
(18:08):
first time buy? What's what's your reaction to that? I
do know people who do make a decision that they're
going to rent and they invest the hell out of
their business and they're very successful. But that's because I mean,
I guess they're investing full stop, which is a good
you know, making money work for you when you're when
you're sleeping. So what do you reckon of that eight
hundred and eighty ten eighty? I'll also come back because
(18:31):
Ed has said that it looks like it's got all
the hallmarks of a claud spreadsheet that timber Bell's done.
And so I've actually popped the article from Marion zed
in to chat GPT and it's even said there are
two or three assumptions that are worse worth putting pushing
back on quite strongly. So dig into that. But also,
how do you look at the history of the property
(18:53):
market to inform you how many of you actually do
that or do you just go with the zeitgeist the
spread of the time. You heard somebody say, oh, look
you've got to get into property. Oh okay, that was
sort of actually funny enough how you sort of got
in in the end, wasn't it.
Speaker 1 (19:06):
Ed?
Speaker 2 (19:06):
Somebody said, come on, Ed, yea shopping for a house?
Speaker 3 (19:09):
Yeah, we we're going to shop for a house to borrow?
Speaker 2 (19:11):
And well did that? We want your We want your
calls as well. We'd love you to join us. I
know we've thrown a lot out there, but you know
Ed was on fire, So let's get It's twenty six
past Forward News Talks a B, News Talks A B
(19:32):
and with Ed McKnight, we're talking about the piece that
was written saying that rents could be better off than
first time buyers based on certain assumptions. And actually I
won't go into the whole chat GPT thing, but the
points that Ed has raised about the assumptions around insurance
and rates increases and stuff their big calls to make.
But anyway, we want your reckons on it because it's
(19:53):
also a question around how do you look at past
data and make your decisions about buying and selling and
all that sort of thing. What you're involved in the
market's going to be Dean high Dean, Hello, how on
a second, I'll just checked that you your vader is up?
Hold it, I need to check the volume for Dean
is up because we haven't got the caller down it.
It's just me talking to my producer because for some
(20:13):
reason we can't hear Dean. That's weird, Dean, I can't hear.
So I'm just going to go to another caller and
I'll know if it's not working if I can't hear Ben.
Ben Hello, No, we oh, we gotcha.
Speaker 3 (20:25):
You've ever got Ben or Dean here today?
Speaker 2 (20:28):
Ben? Good day mate? Where you go years?
Speaker 5 (20:30):
I was speaking to you a few weeks ago. So
the wife's are inherit at a rental. Now we're very
consumed because well you're talking about is it bet at
a rent or buy? Well, I'll draw your attention to
Australia at the moment. So they've changed their negative gearing
for the capital gains tax and if you held the
(20:51):
property over a year, you'd get a fifty percent discount.
So we'd come down from thirty percent to fifteen now
they've taken that out from next year, and the Australian
Property brokers associations reporting ours of managed rentals just in
Melbourne hitting the market and being snapped up by Airbnb
(21:12):
and corporations for short term holiday accommodation, and it's driving
up rents dramatically, like some of them are seeing the
twenty percent increase in rents in the last six months
due to the capital Gains tax increases that come in
next year. So yeah, I'm very concerned, like we're looking
(21:32):
at flicking off the rental property and anticipation that we
get a change of government this year and the CGT
comes in. Because you just look at the tax changes
that are happening over there, that's what they want to
bring in over here, and it's really bad over there
at the moment. So we'll give you in Australia.
Speaker 3 (21:53):
The negative gearing changes that Australia is bringing in. We've
actually had those in for the past seven years. Just
sinder our doing brought those in from April twenty nineteen,
and so I definitely agree with what you're probably saying
that you would likely see a number of Australian landlords
convert across to airbnbs, that would likely increase increase rents
(22:15):
for rentals because you've got less supply. But the specific
the specific tax change you're talking about in terms of
neggative gearing, we've actually had that for seven years, so
it'd be hard for them to bring that in again.
But I understand what you're saying around the capital gains tax.
One other thing that's quite interesting over there in the
Australian market is that any property that was already purchased
(22:37):
before the budget came out is going to be grandfathered
in with the old rules, and so it's probably going
to be unlikely that we see a lot of the
rental properties come on and sell, because if you're a
landlord and you get to keep all of these old
tax rules and they haven't actually been changed on you,
then you'd be you're less likely to sell it because
(22:57):
then you can never get those tax benefits back, whereas
if you keep on holding onto that rental property, you
keep those tax benefits for until the government gets to
change their mind again. And so you'll likely see a
sort of lock and effect where Australians are probably won't
sell their properties because they want to maintain those tax advantages.
But let me ask you this, what's most concerning you
(23:20):
from a New Zealand perspective, that's making you think I
might go ahead and sell that rental we've just inherited.
Speaker 5 (23:26):
Because it's got a mortgage on it currently and we
don't make money off the weekly rent. We actually have
to top it up about five to six thousand bucks
a year. And well we've kept it low, but it's
below market rent. We probably should up it. But even
if we up it, we're still not going to break
even on it. So we're looking at a capital gain
(23:49):
gainly now profit.
Speaker 3 (23:51):
Yeah, I mean that's very normal into in today's market. Right,
the average rental property has about a four and a
half percent gross yield average one year rate.
Speaker 2 (24:00):
What's that about?
Speaker 3 (24:01):
Four eight four point nine percent, So lots of property
investors are topping up their rentals at the moment, especially
if you own in one of the biggest cities. But
I can understand that if you're not into that, then
all good, it might be the right thing for you
to sell.
Speaker 2 (24:16):
Yeah, well, good luck with it, Ben, Thanks for your
col mate. Actually, I do have a quite a funny
text here just about economists and general says Tim. Economists
have predicted nineteen of the last two recessions.
Speaker 3 (24:27):
I'm surprised it's only nineteen, right.
Speaker 2 (24:31):
Anyway, let's take some more calls about this. I know
we sort of we've got lots of questions around this,
but the essential question is, you know about have you
reconsidered your stance on investment that given the you know,
the ideas that some people people are putting out that
you'd be better off renting than buying a first time.
So I got to say, it's not a message I'll
(24:52):
be given to my kids. I'll be like, well, you know,
I want you to get into a house when you
can afford it, because I still think you know that
there's a percentage value that attaches to rents and to property,
and I'd rather that you actually get in there by
having a stake.
Speaker 3 (25:05):
Well, you've got to remember as well. Every time the
Retirement Commission comes out talking about in zed super, they
always say in zed super is based on the idea
that people own their own homes, and now going forward,
not as many people might own their own homes when
they are sixty five, and they're going to do it
really tough in retirement. Again, one of the best benefits
(25:25):
of owning your own home is eventually that mortgage is
gone and your costs go to down to just the rates,
maintenance and insurance. That wasn't captured in this piece of analysis.
Speaker 2 (25:37):
Right, Let's let's go to Dean.
Speaker 4 (25:39):
Get a Dean, Yeah, get a tim A question for
By the way, this is not a new idea. I
remember hearing about this in the nineteen thirty years ago timing.
Speaker 2 (25:51):
Look, we've discussed it even I know we've discussed this
theme even within the last year or so, but this
has just put it out in a bit more of
a bolder fashion. So yeah, get into it, Dean. What
do you reckon?
Speaker 4 (26:01):
Well, I have a question for you. It might be
a bit tangentle, and I apologize for that, But during
the COVID times from say twenty twenty to twenty twenty three,
there was a massive increase in property prices in New Zealand.
And I think there are a couple of factors that there.
Correct me if I'm wrong. At any point. One, there
was a lot of cheap money too. There was a
(26:21):
lot of pressure on house purchases mainly and sorry mainly
partially driven by coying Aurora busy being active in the
market and trying to meet the government's requirements that house
people and social and so on. From your point of view, ed,
was that a responsible action by the government with the
Reserve Bank to allow that situation to happen, because seriously,
(26:41):
there are must be tens of thousands of people in
this country that are now in a negative equity situation
because property prices were grossly inflated during that time. Or
am I just living in cald Cuckoo.
Speaker 3 (26:51):
Land, Ronald, there's a great question, Mar I'm a little
bit of a Reserve Bank apologist, and what I mean
by that as I think they were generally trying to
do the best that they could at the time with
the knowledge that they had. You got to remember, the
Reserve banks modeling at the time was that if they
didn't step in change the LVIR restrictions lower interest rates,
(27:13):
that property prices could fall. In one of their models,
it was up to like twenty twenty five percent. Now
obviously over the last over the last two years or
so or three years if you're in Auckland, that's actually eventuated.
But property prices across New Zealand are still up about
twenty percent from where they were pre COVID. If you're
an invocago, you'll be really happy because they're up actually
(27:35):
twenty two percent since the bottom of the market. But
I do look a little bit kindly on the Reserve Bank,
because although they likely did keep interest rates too low
for too long, it's very easy to say that in retrospect,
and they were dealing, especially in the early parts of
the COVID pandemic, with something that none of us had
really seen before, and what ended up happening was, at
(27:58):
least here in New Zealand, we managed to deal with
the virus much better than most other parts of the world.
And on top of that, consumer spending ended up holding
up relatively well because when we were all sitting at home,
we were all saving up more money. Then we came
out and we started spending more on our houses because
we actually saved for once rather than going out and
(28:18):
spending it. And so I just kind of think it's
really easy in retrospect to say, oh, the Reserve Bank
did so many, so many things wrong.
Speaker 2 (28:28):
But I'm not.
Speaker 3 (28:28):
Sure if you put Adrian or in the Reserve Bank
assistant and Deputy governors back in the same position with
the same knowledge, they'd likely make the same decisions. But
that might be naive of me, Dean, What do you reckon?
Speaker 4 (28:41):
Yeah, I think you had being noise. I think that
the Reserve Bank got plenty of feedback very early on
in the peace, like'd say, halfway through twenty twenty early
twenty twenty one, that the stimulus wasn't required, the spending
was carrying on increasing and that sort of thing, And
suddenly the government had that information and they should have
acted quicker to turn the taps off to stop the
(29:01):
bubble from getting to the point that it got to
in late twenty twenty one twenty two, and then we
wouldn't have tens of thousands of people in a negative
equity situation because the team would have been taken out
of the housing market. And I think that they should
have known them, the government and the Reserve being you know,
that's what feedback leaves are for, right, and they had
all that information, they could see that spending was holding up,
and they took no action. It seems to me.
Speaker 3 (29:23):
Yeah, yeah, I think you've probably got a point around
around not necessarily you know, was it okay that they
brought their interest rates down probably, but perhaps they should
have raised them sooner.
Speaker 2 (29:32):
Yeah, and government spending obviously they're probably you know, obviously
those are political arguments that chris Hip Prince would like
us to forget about, I imagine. Anyway, Look, we've got
another question we're going to get into as well after this,
just about about property investors, and it just ties into
the whole thing. You know, the idea that anyone invests
(29:53):
in property is just a greedy fat cat or are
they just people who are preparing for retirement? Who is
it that makes about property investment population. We'll dig into
that as well with Ed. I think he's got some
hot takes on this as well. He is absolutely sizzling today.
It's twenty minutes to five News Talks. He'd be yes
(30:22):
News Talk, said be indeed were with Ed McKnight. There
is something else, by the way, we want to talk
about because one of the things that there's been a
bit of talk, you know, there's a lot of demonization
that goes on when it comes to the property market
on who's you know, why are people in this for?
You know, who's in it for the money? And all
this sort of stuff, And there's a lot of agro
(30:42):
around branding each other, whether we be a rent or.
It's like the tenancy the tenant, the landlord's versus tenants,
investors versus first time buyers, and it's got to take
on this but a greed. Are all property investors just
greedy fat catshid because I'm sure there be a lot
of people listening going yeah.
Speaker 3 (30:59):
Well, of course I'm going to say no, because I'm
a property investor. I've got a company that helps people
become property investors. But I tell you what I did.
Speaker 2 (31:05):
And you're quite slim too. Oh well, I'll take that.
Speaker 3 (31:07):
I mean, it's only a recent development, isn't it.
Speaker 2 (31:09):
But I'll take that.
Speaker 3 (31:11):
So what I did was I really wanted to understand
what's the motivation behind property investors. Now, we create financial
plans wealth plans for property investors every single week in
my company Opens Partners. So I analyze all four three
hundred and eighty one that we've created over the last
two years to find out how much do property investors
(31:31):
want to spend in retirement? What are some of their motivations?
And I thought that i'd greet to you some of
the things that people have actually said that we've just
released in our Open's Partners What Investors Want report and
my favorite quote that somebody's written in as they said,
they don't want to be the richest people in the graveyard.
They just want to enjoy their lives. They're not looking
to be land barons. And what we see is that
(31:54):
the average property investor who we work with is aiming
to spend about one hundred thousand dollars in retirement. Right,
so that's probably about two point three times souper. Now,
if we look at that one hundred k retirement and
where that money comes from, about forty four thousand dollars
is going to come from ENNZ.
Speaker 2 (32:11):
Super all right.
Speaker 3 (32:13):
On top of that, most people have got a KIWI save.
Speaker 2 (32:15):
I do the number again, what's one hundred thousand?
Speaker 3 (32:17):
So one hundred thousand dollars is what the average property
investor couple wants to spend in retirement.
Speaker 2 (32:22):
Spend what do you mean for the total? No? Per yeah,
per yuh yeah, one hundred that one hundred k per
year yah, so two or three million.
Speaker 3 (32:30):
And so what we've what I did was I said, well,
where's that one hundred k going to come from? And
in these actual financial plans that people have created with
financial advisors. About forty four percent of that spending comes
from enz Super. Another eighteen percent comes from Kiwi Saver.
So if you look at the average person who comes
in and wants that plan, and how much Key We
Saver they've got, and what their income is and what
(32:53):
funds they are in, and you make all of these assumptions,
then you say, okay, about eighteen percent off that's going
to come from Kiwi Saver. That leaves about a thirty
eight thousand dollars a year gap, which is what they're
trying to use property for.
Speaker 2 (33:05):
Which I only point that out to.
Speaker 3 (33:06):
Say the average property investor is not looking to sweeten
the deal for themselves a bit. They're trying to make
their retirement a little bit better. But do you know
what's interesting to now when we ask property investors, well,
what are you wanting out of retirement, it's not going
to surprise you to say that about fifty seven percent
of them say travel, right, But when you look in
(33:28):
and try and understand, well, why do they want to travel?
Where do they want to travel? And I actually read
what real mums and dads in New Zealand have written
into their goal section. When they're creating a financial plan.
They're not looking to lie on a beach in Fiji.
What they're wanting to do is go to the UK
to see their daughter who moved over there, has shacked
up with a brit now and has got some grandkids.
(33:50):
They want to fly back to see their family in
South Africa because they moved over here to find a
better life, and they want to go see their pearans
before they carket. It's actually really just like quite basic
things that all of us want. It's not that they
want ten properties.
Speaker 2 (34:05):
That actually resonates with That resonates with me because you
think as time goes on, what you know, the idea
of your kids moving overseas. I think I like it
having a conversation with this because I do get and
it's something that politicians play the game all the time.
And I'm sorry, but the Greens play it with you know,
regards to property investors and you know, tax breaks for
the landlords and all this sort of stuff like that.
(34:26):
But because part of the whole dishonesty around the political
discussion is branding people is inherently bad and playing this
moral superior they are bad people and stuff, and in
fact that doesn't when it's in fact, it'd be interesting
to know from people who are listening. When you list
that out in you the reasons you've given it all
resonates because you sort of think, if I was to
(34:48):
buy an investment property, why would I do? It? Would
be maybe also to help my kids when I carket
as well.
Speaker 3 (34:55):
Carck it such a charming well, I'll give you a
couple of other things that people are looking for. Another
person wrote in that they want to be able to
go to the grocery store and not worry too much
about what they're putting in their can't because if we
look at the messy university retirement expenditure guidelines, which is
a wonderful report about what people actually spend. If you're
(35:16):
on what they call the no frills lifestyle, you and
your wife as your couple, your budget for fruit and
vegetables for a week would be about twenty eight twenty
nine dollars. Now, I'm not sure how I've actually seen
you just outside the supermarket at our local at est
tim if I'm allowed to say that on end, Now
everybody knows we didn't go to the supermarket. It's expensive
(35:38):
to buy stuff you know, a cucumbers. It's like, what
six dollars I think I saw the other days outrageous
what it can.
Speaker 2 (35:44):
Be, I think, to be honest, I think that the
thought of how much you can have in a retirement
generally ter terrifies many people, regardless of unless they're completely loaded.
If you've just won twelve million in latter you probably
feel the stress lift a little bit, but it doesn't
take much to suck up a bit of extra income.
If you decide all and maybe I want to do
it can be a couple of really simple things you
(36:05):
want to do, or things just in terms of the
way you manage your diet or your exercise or your lifestyle.
Want to do a little bit of travel. It's amazing
how quickly you can kiss gold buy the money.
Speaker 3 (36:14):
Or even if you want to get a camper van
and go around the country, that could cost you, I
don't know, like eighty ninety thousand dollars. I've seen people
spend on those kinds of things. Obviously even more we're
probably talking at the cheaper end. Another person wrote in
just saying that they wanted to be able to turn
the heater on without feeling like they are penny pinching
from some other budget. And so that's the reason people
(36:35):
do it. The other stant I'll just give you tim
if we've got time for it, is that the average
landlord is not looking to buy ten properties. Fifty percent
of investors are aiming for two to four investment properties,
and the average one is just looking for three investment properties. Now,
that's still a good sized portfolio, right, But it's not
property investors just wanting to get as wretch as possible
(36:58):
or buy as many properties as possible. They just want
to be able to turn the heater on, go and
see their grandkids while they're still able to, and put
the corn chips in their shopping basket without worrying whether
they've got the extra five dollars to pay for it.
Speaker 2 (37:10):
Personally, I would still like the ability to maybe just
have my own personal helicopter PADU.
Speaker 3 (37:16):
Well, yeah and me both. We're gonna have to become
mates with the Zulu founders, aren't we.
Speaker 2 (37:21):
Borrow your pad? Anyway? Hey, look, we've got the property
week coming up in just a moment, and I look,
I know we do this by description, but I'll let
you know the address when we come back, and you
can be standing by with you because it's a gorgeous property.
It is a really it's the sort of property you'd
(37:41):
be thinking, now that's me, that's got a bit of
me all over it as an investment or maybe just
somewhere to hang out when you've got a bit of
spare time. It's ten to five news talks. He'd be
welcome back. And now it is that magic time. We've
got quite a special property here, So it's time for
the now. If you've been listening to the past hour,
(38:07):
you know that Ed McKnight, our guest today, has got
some fairly hot takes.
Speaker 1 (38:10):
Now.
Speaker 2 (38:10):
The property itself is one seven nine Shoal Bay Road
and Great Barrier Island. Seven bedrooms, seven bathrooms, floor area,
floor area eight thousand. Now there's a tip ground area.
There's a ground area eight thousand square meters. Built in
nineteen seventy. It's a built in lushnted bush. It's got
(38:31):
it's a triphena harbor, direct water access and I guess
if you're looking for that direct water access, maybe that's
where their value is. But it's it's Pigeons Lodge if
you want to google that, and I think it's basically
hosted guests and everything. So it's probably sort of being
sold as a business, possibly because it says plus GSTFNY.
(38:52):
But it's a lot of money. Actually, it's close to
a couple of million bucks. What did you what did you?
What's your hot take on this?
Speaker 1 (38:58):
Ed?
Speaker 2 (38:58):
I look at it thing.
Speaker 3 (38:59):
Oh, it's a bit rough as guts, isn't it. I mean,
if it was in the seventies, you'd say, oh, how
modern this? But I do think you know telling me
he's dreaming at two million barks.
Speaker 2 (39:09):
I mean, not that I.
Speaker 3 (39:10):
Know anything about the great Great Barrier Island property market.
I don't think if you ever looked at it, But
I just think for two million backs, you buy a
hell of a nice, nice property over over this side.
Speaker 2 (39:21):
Of of what what?
Speaker 3 (39:24):
What ocean is that You've got the tessment on one
side Pacific Ocean.
Speaker 2 (39:28):
Isn't it. I don't know that you're about to throw
me a curveboard now.
Speaker 3 (39:33):
On the side of the Pacific, I think you'd probably
get something quite nice. And and what was that property
we looked at that time out by the prison. That
was a really nice house.
Speaker 2 (39:45):
Yeah, it wasn't too far from a prison, and so
that was one of the things that might have had
a bit of a lit on its value. Look, it's
an interesting one because it's obviously it must be getting
its value because you're going to, you know, put a
bunch of guests up and make some money out of that.
But the building itself, it's it's a little old, looks
like it needs maybe a liquor paint. But it's setting
is where the money must be, wouldn't it surely?
Speaker 3 (40:06):
Oh yeah, the said I mean the set is beautiful.
The house, therey mid mid you know that one. That's
what the kids sometimes say as Oh it's not very good,
it's just average.
Speaker 2 (40:16):
Yeah, I prefer that the castle quite what how much?
Telling me he's dreaming. But anyway it is they reckon
it's one. The asking price is one nine four nine
one point nine million, one point nine to five million,
basically rounding it up a but plus gst if any
which is interesting, which I don't know how that works
when it comes to if you're buying it just as
a home or whether you're buying it as a going concern. Anyway,
(40:38):
you can ask your account in that question. But it
is a beautiful area though, it's worth just having a
look just to see the beautiful setting. And of course
Great Barrier Island a duel, you know, not too far
off the coast of Auckland, of course, a little bit
of a flight.
Speaker 3 (40:51):
Only about thirty minutes.
Speaker 2 (40:52):
That's okay, okay, Hey, ed boy, I'm exhausted. You were
on fire this afternoon. It's good, good work, young man.
Oh thanks mate, when I'll see you the next tider bag. Hey,
thanks for your feedback everyone, and we'll be back with Manish.
Diva is next for the parents squad, talking about well,
you know, Wend you have to take the little you know,
take the foot off the accelerator of tracking your kids,
(41:13):
among other things. Back soon
Speaker 1 (41:26):
For more from the Weekend Collective, listen live to news
Talks EDB weekends from three pm, or follow the podcast
on iHeartRadio
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