Mike's Minute: Should we "break up" with property?

We are being urged, again, to "break up with property". 

We are urged this way once every few years. 

It's based, not unreasonably, on the idea that we could take our money and make it work differently, if not more productively, than it does stuck in a house. 

The latest iteration comes from a bloke at Craigs Investment Partners, who suggests if you put $100 into a house, in 30 years it's worth $600. But if you had done it with shares, it would be worth $1,100. 

Not just that, but the country would be better off. Those dollars would have been out and about investing in stuff, growing stuff, creating jobs, opening markets, and making the world a better place. 

That may well be true. 

Trouble is, that’s a long-term view and most of us don’t have long term views. 

The view most of us have is: what's happened to New Zealand shares so far this year? Answer: they have gone backwards. In the year to date they are down 1.4%. 

Mind you, housing is hardly booming. 

And if you want a glass half full, shares in New Zealand in the last five years are up almost 10%. Houses are most certainly not up 10% in the past 5 years. 

It may change with the time. One child of ours started buying shares while at university. They are of the generation that believes they will never own a house. 

That’s not true of course – they will, but they also have a portfolio. 

But the perception could be the key. If housing is perceived to be unobtainable, what is obtainable? Maybe shares. 

But credibility is also an issue. Shares can be blue chip or meme-type stock. You can invest, or you can punt. 

Stock can be priced to perfection, or it can be solid as a rock. You can be in Fisher and Paykel Healthcare when Covid arrives, or Air New Zealand when Covid arrives. 

It requires a lot, whereas a house is a roof and shelter and a thing you can show your mates and have a BBQ at. 

Houses are easy and they hardly ever lose you money over time. 

To get people to shift, especially when it comes to money, the pitch has to be compelling. 

In an uncertain, crazy world, is a stock market compelling? 

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Episode Transcript

Speaker 1 (00:00):
We are being urged I note again to quote unquote
break up with property. We are urged this way once
every few years. It's a theme. It's based, not unreasonably
really on the idea that we could take our money
and make it work differently, if not more productively, than
it does in a house. Now. The latest iteration comes
from a blow at Craig's Investment who suggest if you
put one hundred dollars into a house in thirty years,

(00:20):
it's worth about six hundred bucks. But if you'd done
it with shares, it'd be worth about eleven hundred dollars.
Not just that, but the country would be better off.
Those dollars would have been out and about. They would
have been investing in staff, growing staff, creating jobs, opening markets,
making the world a better place. They may well be
true troublers. That's a long term view, and most of
us don't have long term views. The view most of
us have is what's happening to New Zealand shares so

(00:41):
far this year? Well, the answer is they've gone backwards.
Yet to date they're down one point four percent. Mind
you look at housing. It's hardly booming though, is it.
But if you want a glass half full. Shares in
New Zealand in the last five years are up almost
ten percent. Houses most certainly are not up ten percent
in that same period. It may change with time. Now
this is the interesting part. It may change with time.
See our children start a buying shares while they're still

(01:03):
at university. They're of the generation that believes also they're
never going to own a house, which isn't of course true.
They will, but they've also got a portfolio. But the
perception could be the key. If housing is perceived to
be unobtainable, what is obtainable, Well, maybe shares, but credibility
is an issue also. I mean, shares can be blue chip,
can't they Or they can be mean type stock if

(01:24):
you're following the Sydney Sweeney nonsense. At the moment, you
can invest or you can punt stock can be priced
to perfection, or it can be solid as a rock.
You can be in F and P Healthcare when COVID arrived,
or you can be in their New Zealand when COVID arrived.
It requires a lot, whereas a house is a roof
and a shelter and a thing you can show you
mates and have a barbecue at It's simple. Houses are
easy and they hardly ever lose money over time. To

(01:45):
get people to shift, especially when it comes to money,
the pitch has to be compelling. But in an uncertain,
crazy old world, which it is at the moment, is
a stock market really that compelling. For more from the
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