Property Investment
2 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Do landlords ACTUALLY add anything to New Zealand?
We’re told that:
It’s irked me for years that people tell us we're greedy. Money grabbers. Parasites.
It’s so bad that last week an investor told me she didn't want her family to know she was investing in property.
So, I teamed up with the NZ Property Investors Federation and commissioned an economic study. You need to see the results.
Last year, property investors contributed $24.8 billion to the New Zealand economy. That’s 5.9% of the entire economy.
That comes from spending on maintenance, renovations and building new houses.
Together, all that spending helps sustain 126,000 full-time jobs. That’s more than everyone employed in the entire public service!
That’s according to the report we commissioned from Infometrics. They’re an independent economics consultancy.
Here’s the thing … landlords don’t just buy properties and sit there twirling their Monopoly moustaches.
Last year, investors spent:
That’s $14.8 billion flowing through the economy.
Then on top of that … every time an investor decides to maintain their house (or build a new one), it sets off a chain of economic activity:
So you get about $14.8 billion of direct spending. And then an additional $10 billion of these spillover effects.
One landlord fixing a leaking roof doesn’t sound like a huge deal.
But multiply that across thousands of investors, and suddenly you’re talking real money and actual economic activity.
Craig Renney (from the Council of Trade Unions) said that if a first-home buyer owned a property, they’d still spend money on maintenance.
But that ignores that most of the direct economic impact comes from investors spending $10.7 billion a year building new properties.
That activity doesn’t take away from first-home buyers.
Because if a first home buyer and investor both want to buy a new house, the developer builds two houses.
And if you just look at new builds, that’s where property investors are sustaining the most jobs. 103,400 jobs are sustained by investors building new homes.
So the data doesn’t support the idea that landlords are just parasites sucking the life out of New Zealand.
Not all landlords are created equal
Buying a house, doing nothing to it, and selling it a year later … Fair enough, people can debate how useful that is.
And that’s why we tax that under the Bright Line Test.
But funding new housing? Renovating rundown rentals? Paying tradies, suppliers and builders? …. That clearly does add something.
So, landlords aren’t automatically saints.
But we’re definitely not parasites either.
You can read the full Infometrics report here. Send it to someone who needs to see it.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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