MY REINZ statistics show NZ median house sale prices of $162,000 for
January 1998 and $178,000 for April ’01 (I don’t have May’s figure), which I
would say more accurately reflect house prices than David Mitchell’s figures
(in spite of his commendably literate submission). More to the point, returns
since 1989 based on REINZ figures give a 3.4% annual increase, and 12-month
rolling average increases declining at 0.1%/month. At 1.1% in April, if this
continues they’ll flatline this time next year.
I anticipated this in 1995, got completely out of property and managed a
13% pa return over a diverse portfolio. This was possible because rents are
increasing an even lower rate than property values - the demand isn't there. I
expected the baby-boom phenomenon (of large numbers of retirees stopping
investing and reducing consumption, and drawing down on investments so causing
a long-term bear market) to occur from about 2010. But recent market movements
lead me to believe that the process has started and a market recovery won’t
occur for many years.
Look between the lines of this taxation report. Taxing property? A
horrifying thought. How much more reasonable an increase in GST and reduction
in personal income tax seems! Not to mention regressive, poverty-enhancing,
rich-enriching, society-warping, or infrastructure-damaging. Roger Douglas
never mentioned that either but still it happened. The twisted self-serving
logic of the new right that says less tax means more prosperity hasn’t yet
been exorcised despite evidence to the contrary. This review continues the
destructive Douglas theme, and his Trojan Horses in the Labour Party can’t
wait to implement the less controversial aspects of it. This country's social
statistics will steadily sink to mid-third-world status and its social
divisions deteriorate, and still Douglasites will see salvation in lower
personal and company taxes.
Chris Slater
See IRG research reports
