REINZ Believes Property Is Winning By Default
REAL ESTATE INSTITUTE OF NEW ZEALAND
- FEATURE ARTICLE FOR JANUARY
1 February, 2000
The Real Estate Institute of New Zealand is pleased that there is a resurgence of investment interest in residential property and hopes that the Reserve Bank will not move against this trend, REINZ president Mr Max Oliver said today.
He was commenting on the latest ASB investor confidence survey which shows that residential property is gaining in popularity at the expense of other investment forms, but notably managed funds.
Mr Oliver said residential property investment should not become the whipping boy for the failure of alternative investments to produce returns that investors found attractive.
Mr Oliver said his group was the first to acknowledge that residential property was not among the highest performing investments and that there were plenty of pitfalls in residential property investment for rental purposes.
He said that the real attraction of residential property investment was not necessarily the prospect of capital gain which so concerned the Reserve Bank, but the opportunity to use existing equity in a home to leverage into a second property, the rentals from which gradually retired debt over a longer period.
The result was simply long term savings with minimal risk.
Mr Oliver said the Real Estate Institute had always advocated residential property investment for those who wanted an uncomplicated and low risk investment.
“Residential investment property has been the preferred means of retirement savings for many people for years especially those who wish to rent a property out, do some of their own maintenance, and regard the property as a retirement savings medium.”
Mr Oliver said he was aware that the Reserve Bank was not in favour of people over-investing in residential property, but he believed that until the Reserve Bank and the government did something to incentivise other forms of savings to improve returns, especially for those saving for their retirement, and generally dealt with the poor investment returns created by the current economic climate, there would need to be a degree of acceptance that New Zealanders were voting with their feet in prioritising residential property investment.