INTERVIEW: Property investor, author and consultant Olly Newland explains in this interview with Bernard Hickey of interest.co.nz why he prefers retail commercial property. He details how leases with shop owners can be renegotiated and how ‘ugly duckling’ buildings can be turned around. He also talks about how higher unemployment creates demand for retail spaces …
Olly Newland’s Column, August 2010
The news from the front seems to be doom and gloom these days if we go by the articles and news that get pumped out by the media.
But it pays to remember this about the news media: Bad News Sells.
You hardly ever see headlines that say positive things, let alone good news. It seems that it has to be ‘shock and horror’ each time – and the more shock and the more horror the better.
Remember, all the media are jostling for attention and the headlines are designed to catch attention. Therefore — whatever the news is — many times the worst possible angle is portrayed in an attempt to make it penetrate the mind of the readers who are already swamped with messages from all sides.
So it is no different for news about the property market. There is no doubt that the market has slowed but it is not nearly as dead as the media would suggest.
There is always an argument between over-stating the downside and over-stating the upside and it sometimes takes fine judgement to decide which is the more accurate.
I have personally experience several very nasty slumps and very exciting booms both here and in Australia. (Both were costly) These experiences give me some authority to comment (you are entitled to disagree, of course).
I am also sure one day, the unpleasant experiences we have witnessed or endured will pass and we will look back and wonder why many of us were so extremely nervous without good cause.
Of course many people have been badly effected and one has to be sorry for them even if it was there own greed that put them there in the first place. Even worse are the innocent who were duped by dodgy practices or outright theft.
The fact is we live in a capitalist society and financial disasters are one of the hazards of the game.
Done Deals
One thing is for sure. I got my best bargains during downturns.
graph: Crockers
Olly Newland’s July 2010 column
In this column, I would like to cover a variety of topics, as the last few weeks have been crammed with ‘news’ and opinions about the property market — and much of it arrant, dangerous nonsense.
Some folk in the news media and posters on various websites have had a field day predicting the imminent collapse of the property market. They continue to be spectacularly wrong, it should be noted.
These deluded commentators seem to believe that if property prices fell by 20% to 30% (as some have predicted) then they, and their children would be able to buy a house more cheaply in the future and that would be a wonderful thing. They think a massive drop in the market would make housing ‘more affordable’.
What they cannot understand is if that really happened hundreds of thousands of Kiwis would be out of work, much of our economy and industry would come to a virtual halt, the banks would collapse and New Zealand would be reduced to a nation of ragged beggars left to shuffle through the two dollar shops and rifle garbage bins.
Jobless and with an economy in ruins it wouldn’t matter if houses were a third of their present price. They would still be unaffordable.
It will cause some consternation to these nay-sayers to learn this week, that house prices are still well up on this time last year despite the usual upside down view some in the media always make of these things.
link: http://nz.biz.yahoo.com/100711/3/k6u6.html
I always derive much amusement in the way the media portray good news through the wrong end of the telescope. The headline in this example says: “House prices fall further in June”.
It’s not until you read down further that in fact house prices are still 5.2% higher than at this time last year and the slippage (if you can call it that) is a statistically insignificant 0.4%. Put another way, it is effectively a yearly increase on the current average price of $404,715 by a respectable $21,045 (or approximately twice the rate of inflation!)
Mortgagee sales continue to soar
Olly Newland on TV3 News (click to watch video)
By Ingrid Hipkiss
TV3 News SUN, 04 JUL 2010
Watch video at TV3
When the credit crunch first hit the property market, it was developers and investors with multiple properties who bore the brunt.
Now, market analysts say the pain is more widespread.
“We’re seeing more and more mortgagee sales affecting the kind of individuals we term ‘Mum and Dad homeowners’,” says property market analyst Mike Donald.
Latest figures show an average of eight properties go under the mortgagee hammer every day, their owners unable to afford their mortgage payments.
That is down from highs of 11 per day in September 2009, but still about seven times what they were pre-recession.
“What people should be doing is going straight to the bank to make a deal,” says property market advisor Olly Newland. “The last thing a bank wants is to take your house back and have another house on its books. They’ll do anything, within reason, to make a deal.” (more…)
Olly Newland’s Column, April 2010
The latest statistics make interesting reading indeed. What they show is there has been a huge surge in people choosing to rent. There will be serious consequences if this trends continues … which I am sure it will.
Many have come to realise that renting is still far cheaper than owning especially while capital growth remains so elusive.
The last surge in renting was in 2008 but for different reasons. The rise in house prices and the higher interest rates prevalent at the time forced people into renting. Now the picture and the reasons have completely changed.
The following article by Mr B Hickey of interest.co.nz demonstrates what is happening in the market. (Although he and I draw different conclusions.)
Rents unchanged for 2 years despite surge in numbers renting
April 9th, 2010
New Zealand’s median weekly rent was unchanged at NZ$300 in March from NZ$300 in both March 2009 and March 2008, but the number of New Zealanders lodging bond rentals has surged in the month by more than 54% to 19,683 in the last two years as many opt to rent rather than own. …
Olly Newland’s Column, March 2010
NZ Prime Minister John Key made a fundamental blunder when he recently delivered to Parliament his views — the government’s views — of the proposals from the Tax Working Group.
Quite rightly he booted out the looney leftist ideas of land tax and capital gains tax (typical notions that arise from those whose lives are filled with envy whenever they see people other than themselves doing well).
However he caved in on one recommendation and gave a clear signal that the treatment of depreciation on investment property would be attacked in the Ministers of Finance’s Budget due out in May.
What the new measures would be was not made clear. No details were given … so the public has been left guessing about the imminent new measures.
Neither, it seems, has anyone considered what the flow-on effects may be — and what unintended consequences may eventuate.
Even more disappointingly, by innuendo the Prime Minister appeared to go along with the suggestion that property investors act as some kind of free-loading extortionists ripping of the system while swimming up to their armpits in ill-gotten gains.
It appears that he chose to be ‘the populist’ — swayed by the ignorant masses who bay for blood, revel in public hangings, while cutting everyone down to size at the first opportunity.
The government as a whole has stumbled badly this time, which is hard to understand given that the Prime Minister and the Minister of Finance, Bill English, both have a good background in finance. Surely their collective wisdom would have taught them one thing:
Uncertainty creates unease and unease creates distortions.