Property prices are sliding after decades of big returns for investors - and property stories and ads have been highly profitable for the media in that time too. Recent warnings the ‘one way bet' on property could be a thing of the past have made headlines - but property investors with a media presence are still saying it's safe as houses.
Reserve Bank economist Paul Conway sets out a case for a slowdown in housing prices - and profits for investors - in the New Zealand Listener. Photo:
“Property plunge? Why housing is no longer a one-way bet,” says the bold banner atop the front page of the latest New Zealand Listener, accompanied by a pair of ruby red gambler’s dice.
It was a teaser for a piece inside by Paul Conway, the Chief Economist of the Reserve Bank / Te Pūtea Matua. The Bank has predicted housing market corrections before - and been wrong - but in this rewrite of his speech to the recent National Property Conference, Conway claimed the dynamics of the housing market are changing.
Listener editor Karyn Scherer pointed out the real estate industry’s own stats show prices down by 8 percent from November 2021 already. BusinessDesk data journalist Andy Fyers showed this week ”markets with the highest prices at the peak of the market have had the biggest declines.”
“It underlines the extent to which affordability, given higher interest rates, appears to be driving prices down,” he concluded.
This week BusinessDesk’s Cook the Books podcast asked “Is the housing market really about to crash?”
Infometrics media-friendly economist Brad Olsen said don’t bank on past profits from property in the future.
But the parts of the media dedicated to property paint a different picture.
NZME, which owns BusinessDesk and the New Zealand Herald, also has a separate online platform devoted to news and ads about property alongside listings - One Roof.
Its stories about the property trade also appear alongside the Herald’s ones on the Herald’s own website.
In a recent one headlined Double your money One Roof property columnist Ashley Church - a professional property investor - ran the numbers on median house prices all the way back to 1990 to see if the so called ‘ten year rule’ - that New Zealand property doubles in value every decade - was really true.
“The ‘doubling of house prices’ that some property commentators talk about can now be empirically proven to be true,” he concluded.
The numbers are not always exactly 100 percent up, he said, but if you pick two dates ten years apart they were mostly not far off by his sums.
But what about ten years on from the uncertain times of right now?
“In my opinion, this trend will continue and, when we look back on house price growth in 2030, we’ll find that house prices are still doubling but that it’s taking even longer – perhaps 14 to 15 years – for this to happen,” Ashley Church told One Roof.
Two other experts told One Roof another doubling was uncertain. One said that even if your property did double by 2032, all the equity will go straight back into another one if you need somewhere to live.
Along with BusinessDesk and One Roof, NZME owns radio network Newstalk ZB which airs the One Roof Property Hour every Saturday and Sunday.
Ashley Church is the guest on Sundays and last weekend he told listeners there was no reason to be nervous.
He did point out big economic shocks - like the GFC, the ‘87 crash and Covid - have all disrupted the pattern over the past 40 years, but there was no such reticence from another high profile professional property investor advertising during the show.
“Property in New Zealand has doubled every 10 years. So an investment property purchase today could give you a significant tax free profit over the next five to 10 years,” said Nikki Connors from the company Propellor Property, who promotes herself as “the Queen of Kiwi property.”
“This can help pay off your mortgage and give you cash for the future. You can start by using a small portion of the equity in your home to guarantee the deposit on a new build property, and of course, to work with the experts. Why haven’t you called us yet?” she asks listeners in the ad.
Those holding back might not be convinced by ‘the ten year rule’ at uncertain times like these. But they might have seen the recent reports that IRD lodged an application last month to liquidate Propellor Property - and later, two others associated with it.
Connors told Stuff this was “heavy-handed and said in a statement any unpaid taxes would be sorted out by mid-July.
And, like other businesses, she said hers had been “impacted by the pandemic".
But property prices had soared during the pandemic, only falling back recently.
No-one could be sure that would happen when Covid hit in early 2020.
But Nikki Connors was confident in an NBR interview in May of that year.
“Property has doubled every 10 years through four cycles over 40 years. There is always going to be something we didn't expect - and it was a pandemic this time. But in New Zealand we do have this huge demand,” she said.
The IRD’s liquidation application is due to be heard in the High Court at Christchurch a month from now.
A recent One Roof article about property seminars that sell the idea of investing to people noted that Nikki Connors is still running them.
People getting the message that property’s still safe as houses is crucial for property investment companies - and parts of the media profit from it too.
