Forum Archive Index - June 2001

["Iain Ballantyne" <iain@aircharter.co.nz>]

Just a small investor in the NZSE here but interested to hear your comments.

I like a number of individuals am listening with open ears to the comments
of the past few days and am speaking to the open market re my plight (small
though it be)

Started a small quality niche market Building business 12 months ago after
10years running other peoples building companies.

I would be interested in your forums comments as to the plight of my
industry.

1/.    We build in the $120,000 to $200,000 arena.
2/.    Have won a couple of building awards and are regarded as a premium
product.  ie: you may pay a little more but you get twice as much.   (albeit
it takes a lot of effort to get that)
3/.    Have invested a lifetimes of experience and integrity in this
endeavour.

If for example I were to open up shares on a local level how do your think
the latest round of talks would affect this arena and what does it spell for
the building community at large.

Your comments would be most appreciated and will be listened to with an open
mind.

Thankyou for your time





----- Original Message -----
From: David Mitchell <david_mitchellnz@yahoo.com.au>
To: <sharechat@sharechat.co.nz>
Sent: Friday, June 22, 2001 5:37 PM
Subject: [sharechat] Property Vs Shares


> Here are my arguments
>
> Malcolm Breadmore,
>
> 1. Yes, I agree someone has to own the house,
> but this doesn't mean they are not overvalued or
> that vast majority of the people who own them are
> under a major economic illusion.
>
> 2. Why does the rent have to go up ? I'm not
> sure about the rental market in other centres
> however I look at my local paper in Christchurch
> and see two whole pages of houses for let. There
> is a major oversupply. Also the major demographic
> users
> of rental housing, the 20 to 30 year olds is a
> shrinking proportion of our population.
>
> 3. I am not comparing the NZ economy with Kenya
> and Bangladesh. I am comparing the level of home
> ownership.
>
> 4. You and I both know that shares outperform
> property. Sure, the NZSE has had a dismal record
> but what about the ASX, NYSE, S&P500 ?
>
> 5. Yes I agree investors want the best returns, but
> I believe the property market is overvalued
> because there is a large group in NZ who are still
> under the illusion that residential property
> is bulletproof asset. It has treated them well in
> the past and they continue the behaviour this way
> without regard to changing demographics and inflation.
>
> 6. The lack of affordability of houses may increase
> the number of renters, OK. This will increase the
> rental return
> of the houses. But people buy houses for their capital
> gain, that is their major selling point. People who
> are
> on high tax rates buy houses to make a cashflow loss
> to
> offset tax, they buy them for thier capital gain.
> The lack of affordibility will correct the market with
>
> house prices falling with lack of demand and rentals
> increases with more renters.
>
>
> After this correction, I believe that housing will
> become a more attractive asset to own.
>
>
> Ian,
>
> I agree diversification is possible in property, but
> only if you have alot of money and are prepared to
> travel.
>
> What I mean by undiversified is that, say you are just
> starting to build an investment portfolio. You can
> go into residential property using say $30,000 for
> a downpayment buying a $100,000 house. All of your
> portfolio is then tied up in that asset in 21 Joe
> Bloggs Ave, NZ. The city and country where you live
> and work.
>
> Using the same $30,000 you could borrow $70,000
> through margin lending and spend $100,000 on maybe 10
> different shares. Maybe stocks in NZ, Oz or overseas.
>
> The point is it is very difficult and time consuming
> in property to invest in Oz or overseas. Also you
> can't buy $5,000 of 44 Smith St, Christchurch, $5,000
> of Johns Lane, Auckland etc etc.
> If you live in your own house, it is under the same
> economic risks that you are directly under.
>
>
> David Mitchell
>
>
>
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