Who’s To Blame For The Rising Cost Of Property? (Column)

Olly Newland’s column May 2012

Almost on a daily basis websites are full of angry people accusing ‘speculators’ of ramping up the price of property — supposedly pushing it out of reach for ‘the poor’ and first home buyers.

'The Tax Gatherer' 1540 - Marinus Van Reymerswaele (click to enlarge)

‘Bring in a Capital Gains Tax!’ is the cry, or there are calls to ‘restrict’ lending for property purchases, or to ‘punish’ investors by removing tax advantages, or to flood the market with more undeveloped land. Some even want the government to tax gains that have not even been realised.

This cacophony of shrill envy aimed towards property investors is almost exclusively driven by those who cannot comprehend this market reality: where someone has actually taken the plunge, bought a property of some kind and then — whether immediately or over time — made a profit.

However let me tell you that it’s not ‘speculators’ who are driving up the price of property. Indeed, they are more likely driving *down* the price of property! For speculators can only really thrive by fierce haggling in order to buy at bargain prices.

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Q&A: The impact of teaser loans in USA

Hi Olly,
I really enjoy reading your articles. With all the talk about house prices and the market, I am surprised not to see any commentary (from you or others) about the next ‘lot’ of teaser loans that will come off the books in the USA. For others benefit, the teaser loans were a pre cursor in the sub prime market in USA. Low interest loans for a couple of years, that then have the interest rates jacked up = people cannot afford the new repayments = they lose their house. Could you possibly offer your opinion on this, as I feel it may have an impact in NZ in 2012/13.
Many thanks, Rob

Dear Rob
I too have heard about the “teaser loans” but NZ didn’t go in for these to the same extent so the impact here will hopefully be limited.
Furthermore I believe the Authorities in the US will not allow them to get out of control by printing more money = inflation.
They have had plenty of notice and practice.
Cheers, Olly