Kenyon Clarke: Property Haters In A Crisis
Published on March 19, 2020
I’ve had a few people ask about what impact COVID-19 might have on the property market. These people are (understandably) a little nervous, and that’s what happens when there’s uncertainty. What also happens when there’s uncertainty, I’ve found, is the rise of a portion of society who just love to hate property investors. They seem to hope that somehow our property market will crash and we’ll all be left broke and sad. There’s a word for this. It’s “schadenfreude” and it’s defined in Oxford dictionary as “pleasure derived by someone from another person’s misfortune.” “The bubble will burst”, “Just wait, prices will drop” they type away in anticipation. They appear in the news, in chat groups and in the comments sections of our property ads:
The same types of people were there to celebrate my misfortune during the Global Financial Crisis of 2008, when my bank the Hallifax Bank of Scotland went bust and I lost $120m. Although I, and the property market bounced back tremendously, this group has once again managed to rear its ugly, misinformed head.
As much as this article is for people who are genuinely nervous and I sympathise with them, it’s also for the haters who quite clearly, need another education in what actually drives property values.
The macro-economic factors of the property market are still present. In New Zealand, we are still seeing massive population growth and an extreme undersupply of housing.
Approximately 290,200 additional households in Auckland in the 10 year period to 2028 will need to be housed. In the most recent 10 years a total of 78,179 new homes have been consented in Auckland. Demand is likely to continue to outstrip supply.
(Colliers International, Build-to-Rent Occupier and Investor Demand, October 2019)
People are still moving to New Zealand in droves. Over 50,000 people every year, in fact. Our private jet terminals are becoming busier and busier with ultra-high-net-worth individuals who see our country as a secure place to live, do business and invest.
So long as this is the case, not only will our housing market fail to crash, property values – especially in places with strong rental demand, infrastructure, employment hubs and transport links – will only increase.
The economic impact of COVID-19, like the 1981 Global Recession, the 1987 Stock Market Crash, the Global Financial Crisis of 2008, the Christchurch Earthquake, will pass. And just as it did before, property prices in Auckland, and at a slightly lesser rate, wider New Zealand, will continue to rise.
In all of this, the most important thing for people to remember is to build financial resilience for the long term.