In this episode, we attempt to dispell the myth that property investment is undesirable for New Zealand (or any country). There are several reasons why we believe that property investment is good for the country:
- 440,000 of New Zealand's 525,000 rental properties are supplied by Mum and Dad investors (the private market). Every additional property that is supplied by private investors is another house that the government doesn't have to provide. This saves the government spending enormous amounts of public money on housing
- Many residential properties are negatively geared, which means that the investor is putting money into the property each week, and the rent doesn't cover all of the expenses associated with the property. This means the investor is effectively subsidising the tenants to live in the property
- The reason many Mum's and Dad's become property investors is to sort out their own retirement. By investing in property they are taking responsibility for their own retirement, which places less burden on the state
- When property investors invest in brand new properties they help more developments get off the ground. If property investors weren't in the market then developers could only sell to owner-occupiers. This would shrink the market for development and would mean that fewer houses would be built, and they may be more costly, both to get off the ground in the first place and because of economies of scale
- When property investors bring new houses onto the market – whether through building new developments or renovating run-down properties – the supply of housing increases. This decreases the price of houses, relative to what they would otherwise be.
