Investor blame game unfair

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Blaming property investors for problems related to the heated housing market ignores the real problem of limited supply, a property investors’ advocate has warned.

Monday, December 12th 2016, 3:00PM 2 Comments

by Miriam Bell

NZPIF executive officer Andrew King

According to the BNZ’s latest Financial Futures Research, 35% of New Zealanders blame property investors “in the market to make a profit” for the country’s housing crisis.

While 13% said foreign buyers are the issue and another 13% said record migration levels were the main causes of the problem, it seems that investors are public enemy number one on the housing front.

Just 11% of New Zealanders pointed to supply as a leading cause of the problems.

BNZ chief executive Anthony Healy was surprised by the results, particularly on the supply front.

Understanding the issues around housing, especially in Auckland, is complex, he said.

“It is certainly easier to focus in on migrants and investors as the main issue as they are visible and clearly part of the demand side.

“But it is important we have a balanced debate here, and take the time to understand the supply side pressures as well.”

Healy said those involved in the sector on a day-to-day basis - such as banks, developers, builders, Auckland Council - need to do a better job of communicating the bigger picture and what needs to be done to increase supply.

“With the Unitary plan for example, I fear too many Aucklanders were concerned about the potential impact on their own back yards, rather than the future of Auckland and its importance to the prosperity of New Zealand.”

Property investors have long been highlighted by much of the media as the cause of the country’s skyrocketing house price inflation and affordability issues.

NZ Property Investors Federation executive officer Andrew King said he doesn’t understand why investors have become the “whipping boy” in the dialogue surrounding housing.

Record levels of migration along with an existing housing shortage mean it is clearly a supply side problem, he said.

“Further, the supply situation has simply not been responsive to the demand changes – and that is the biggest factor in this crisis.”

The results of the BNZ research were extraordinary, but people who don’t know much about the market are subject to a lot of misinformation, he said.

“All they see in most media is that people who buy property as an investment are keeping first home buyers out of the market, ripping off tenants and avoiding paying taxes.

“This ignores the fact that, at the end of the day, investors supply rental homes to tenants for which there has always been a demand.”

King said there was also a widespread misperception of what an investor is – with most people thinking that investors all own huge amounts of property.

“But that is not the case. Only 7% of the population own rental properties and most investors own just one or two properties.”

Evidence of this can be seen in CoreLogic’s buyer classification system which uses the term multiple property owner for any buyer who has more than one property.

Within this group, buyers who have two properties easily make up the biggest share.

Public perceptions of investors were simply out of whack with the reality, King said.

“It is a shame as it will put people off investing in property and providing more rental stock at a time when it is desperately needed, especially in Auckland.”

He agreed that improved communication, on issues like supply, from those involved the property sector was needed to address the problem and counter misinformation.

“But when the NZPIF has made concerted efforts to do that in the past, the response has tended to be that we have vested interests so we would say supply, rather than investors, is the problem.”

Meanwhile, the BNZ’s research also examined views on the new LVR restrictions.

It shows that 65% were supportive of the new LVRs, but 83% thought they won’t have a substantial impact on housing.

When asked about the prospect of debt-to-income ratios, 57% supported them, but only a third thought they would have any impact on rising house prices.

Healy said any measure that is seen to be targeting investors would go down well with those who aren’t investors – yet ratios can also have a real impact on first home buyers.

There is no silver bullet to the housing affordability challenges, he said.

“But there are positive signs on the horizon including moderating house prices, more supply coming on and innovative proposals to provide more affordable housing stock.”

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