Latest / Best of Business / Jeremy Williamson: head of private wealth and markets at Craigs Investment Partners on whether NZ needs to let go of property investing

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Jeremy Williamson: head of private wealth and markets at Craigs Investment Partners on whether NZ needs to let go of property investing · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks Be follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Do we need to break our lover fear with property?
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  Speaker 2: Jeremy Williamson here to Private Wealth and Markets at Craig's
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  Speaker 2: Investment Partners reacons we should be investing in assets that
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  Speaker 2: actually grow the economy, and he joins us now afternoon, Jeremy, Hey, guys, Hey, Jeremy, why.
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  Speaker 3: Do key we still love property so much even when
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  Speaker 3: the returns aren't what they used to be.
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  Speaker 4: I keep asking myself the same. Look. I think there's
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  Speaker 4: a couple of parts to it, guys.
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  Speaker 5: I think kiwi's they love what they can see and
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  Speaker 5: tangible assets, and we look, we all know that we
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  Speaker 5: can touch an investment property it stands, it's relatively transparent
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  Speaker 5: in terms of how it's valued.
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  Speaker 4: And I think the other thing is access to borrowing.
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  Speaker 5: So it's very hard for a lot of a lot
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  Speaker 5: of kiwis to get access to borrowing, and mortgaging the
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  Speaker 5: houses is a way to do it. And maybe if
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  Speaker 5: we go back a few decades, back to the back
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  Speaker 5: into the eighties, there for a lot of for a
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  Speaker 5: lot of older kiwis there was a difficult period in
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  Speaker 5: the ship market around the eighty seven crash, So I
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  Speaker 5: think it's a whole lot of that stuff that has
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  Speaker 5: affected the national psyche. And I think it's time to
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  Speaker 5: have a conversation around around well, what can we do
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  Speaker 5: for the betterment of Kiwis and the next generation? And
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  Speaker 5: I think our disposition towards property investment's got a part
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  Speaker 5: to play.
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  Speaker 3: Are you talking about second properties and investment properties? Because
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  Speaker 3: of course your first house has more than a financial investment,
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  Speaker 3: and it's an emotional investment. It's a piece of the country.
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  Speaker 3: It's it's you know, something solid. It's the ability to,
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  Speaker 3: I don't know, knock out a wall with a sledd
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  Speaker 3: chamber if you if you want to. So are you
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  Speaker 3: talking about moving that investment away from you know, from
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  Speaker 3: when as a financial investment? Or do you think people
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  Speaker 3: should give up on the family home in the first place.
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  Speaker 5: No, I'm in the ladder camp, and you know, for
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  Speaker 5: a lot of Kiwis, the family home sacrisanct and you
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  Speaker 5: know we all feel like that, don't we. It's more
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  Speaker 5: the second and third and fourth homes, the investment properties,
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  Speaker 5: all that stuff. I think it's time to have a
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  Speaker 5: conversation nationally around what is that actually doing? And I
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  Speaker 5: think of you know, when your kids playing past the
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  Speaker 5: parcel and trading and buying and selling investment.
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  Speaker 4: Properties to each other.
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  Speaker 5: Feels a bit like that to me, where you know,
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  Speaker 5: you take a twenty dollar notes, you pass it around
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  Speaker 5: the circle, it still comes back as a twenty dollar note,
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  Speaker 5: doesn't it. I feel like the love affair we have
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  Speaker 5: with investment property has the same sort of thing to it.
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  Speaker 2: A lot of people will be hearing that, Jeremy and
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  Speaker 2: thinking it's quite altruistic a statement from yourself that we
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  Speaker 2: do what's good for the country than ourselves. And I
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  Speaker 2: think what you say is a lot of logic to it.
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  Speaker 2: But you get what I'm saying. A lot of people
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  Speaker 2: are their their primary focus is what is going to
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  Speaker 2: build wealth for them and their family and hopefully something
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  Speaker 2: to hand down to their kids and for them, property
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  Speaker 2: still feels like the way to go.
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  Speaker 5: Yeah, and I can understand that. I mean, that's that's
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  Speaker 5: that's an equally valid view as well. I guess I'll
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  Speaker 5: take it up a few levels, and you think of
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  Speaker 5: it from a national point of view, if we were
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  Speaker 5: to if we were to have a national conversation and
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  Speaker 5: move just the dial slightly.
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  Speaker 4: I mean, I'm not sitting here saying let's all get
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  Speaker 4: out of property.
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  Speaker 5: It's not where I'm coming from. Where I'm coming from.
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  Speaker 5: If we move the dial slightly and put a bit
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  Speaker 5: more of that investment property capital into productive assets, grow
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  Speaker 5: the economy, grow productivity, create more jobs for the next
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  Speaker 5: generation of kids coming along, and take a bit of
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  Speaker 5: heat out of property prices generally. Because I think inequality
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  Speaker 5: is a bit of a conversation we're having national at
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  Speaker 5: the moment, and over allocating to property as a country,
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  Speaker 5: I think it has a part to play in equality
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  Speaker 5: as well.
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  Speaker 3: So how much we're talking how much of a dial
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  Speaker 3: shift do you think would make a material difference to
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  Speaker 3: to our economy.
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  Speaker 4: Oh look, I want to crunch the numbers in my
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  Speaker 4: own head. But if I was to have a stab at.
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  Speaker 5: It and put me on this rightly, roughly roughly, Look,
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  Speaker 5: I won't put my life on it, But what I'll
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  Speaker 5: say is I'm talking a couple of percentage points, you know,
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  Speaker 5: up to maybe two, three, four, five percent would make
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  Speaker 5: a huge difference. You know, we think about our investment
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  Speaker 5: and housing generally, and investment properties and New Zealand residentially.
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  Speaker 5: I think the number is something like one point six
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  Speaker 5: one point seven trillion. So that's a big number. And
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  Speaker 5: if you break it down into a little bite sized pieces,
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  Speaker 5: a few percentage points could make a big difference in
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  Speaker 5: terms of that capital going into this productive assets. So yeah,
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  Speaker 5: I'm certainly not sitting here saying let's let's run for
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  Speaker 5: the hills from proper. I just think that's that the
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  Speaker 5: conversation is starting to shift around how we turn the
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  Speaker 5: dial just a little bit.
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  Speaker 3: You kind of touch this on this before, but as
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  Speaker 3: this text, a bend says, you can't borrow five hundred
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  Speaker 3: k and buy shares and make four to six on
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  Speaker 3: that five hundred k. If you went into a band
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  Speaker 3: and see ed, look I've got this portfolio I want
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  Speaker 3: to buy. Can you can you give me a mortgage?
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  Speaker 3: They're probably going to say get out, aren't they?
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  Speaker 4: Yeah, they are. But I think it goes back to
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  Speaker 4: the earlier point, doesn't it.
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  Speaker 5: I mean the family house being sacrosanct to New Zealanders
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  Speaker 5: and maintaining that culture and getting access towards towards some
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  Speaker 5: borrowings that way, to whether they have that personal decision
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  Speaker 5: to put some of that borrowing into other asset classes.
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  Speaker 5: But you know, my conversation, what I'm thinking about is
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  Speaker 5: more around that second second third and those sort of
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  Speaker 5: investment properties. But yeah, there's no doubt that the family
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  Speaker 5: home sacrisanct creates memories. It's a place for the family
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  Speaker 5: to be and also can can help with some access
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  Speaker 5: toge We're.
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  Speaker 3: Talking to Jeremy Williamson, head of Private Wealth and Markets
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  Speaker 3: at Craig's Investment Partners. Now, you mentioned the eighty seven crash,
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  Speaker 3: and we all know that the country went crazy for
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  Speaker 3: stocks after the Longe government came in eighty four. There
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  Speaker 3: was this huge boon and then a lot of people
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  Speaker 3: got burned, and it felt like there was a cultural
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  Speaker 3: fear that spread through the nation against the shear market,
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  Speaker 3: and that was pointed out as a moment when people
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  Speaker 3: moved heavily into property because they thought it was less riskier.
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  Speaker 3: How fair is that view now that property is less
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  Speaker 3: risky than a second property is less risky than the
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  Speaker 3: shear market, for example.
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  Speaker 5: Yeah, Well, I guess for how I look at that
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  Speaker 5: is to sort of look at it the other way.
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  Speaker 5: And back in the eighties, the share market was dominated
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  Speaker 5: by investment companies.
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  Speaker 4: The companies set up to invest in.
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  Speaker 5: Small pieces of other companies that would invest in small
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  Speaker 5: pieces of other companies. So it was it felt like
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  Speaker 5: a little bit of a house of cards. I contrast
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  Speaker 5: it today. You look at listed the listed market here
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  Speaker 5: in New Zealand. It's full of productive companies that actually
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  Speaker 5: do things. They export, they create, create create jobs, they
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  Speaker 5: pay their taxes and they're doing great for New Zealand.
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  Speaker 5: I think of the companies like Fisher and Pigirl Healthcare.
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  Speaker 5: So I think it's changed. I think it's changed dramatically,
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  Speaker 5: but you know, I appreciate there'll be some around that go.
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  Speaker 4: You know, I had that bad, bad.
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  Speaker 5: Experience in the eighties and and bricks and mortar feels
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  Speaker 5: safer to make.
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  Speaker 3: So if that's the case, do you reckon that the
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  Speaker 3: tax system needs sort of a shake up to get
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  Speaker 3: people looking beyond property if people are still nervous and
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  Speaker 3: as you say, it's good for the company if we
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  Speaker 3: start investing in and things that employee people, and you know,
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  Speaker 3: in New Zealand companies. Do you think that that a
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  Speaker 3: change to the tax system could could Yeah.
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  Speaker 4: It could do.
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  Speaker 5: I mean, I think it's worth thinking about isn't it.
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  Speaker 5: And generally what you what you find with the taxation
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  Speaker 5: system in life generally is that you know, incentives to
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  Speaker 5: get into into things that are good for good for
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  Speaker 5: the economy.
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  Speaker 4: Tend to work.
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  Speaker 5: You know, I'm known tax tax expert and not a
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  Speaker 5: favor with all the tax settings of course, but I
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  Speaker 5: think it's it's a good time to think about all
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  Speaker 5: that sort of stuff.
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  Speaker 3: And we hear that young people are locked out of
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  Speaker 3: the property market, So are they just naturally moving away
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  Speaker 3: from property? Will this just just change over time as
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  Speaker 3: it becomes impossible for young people to get into property.
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  Speaker 3: So they're like, now I'll have it all at bitcoin.
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  Speaker 5: Yeah, it's a question I'll get us all the time.
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  Speaker 5: When you look at offshore, I mean we've been a
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  Speaker 5: property ownership for our primary domicile. Owning that prominent primary
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  Speaker 5: domicile has been an important part of keepa culture you
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  Speaker 5: know offshore. You know, in the European some of the
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  Speaker 5: European countries, you know, renting is something that is far
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  Speaker 5: more normal with a higher prevalence rate, So you know,
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  Speaker 5: maybe it goes that way.
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  Speaker 4: You know what what we.
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  Speaker 5: See a are now our business at at Craigs there's
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  Speaker 5: a lot of young people getting into the share market
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  Speaker 5: and that's exciting and good luck to them.
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  Speaker 2: Jeremy, it's been great chatting with you. It's an interesting
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  Speaker 2: discussion and we're looking forward to see what our talkback
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  Speaker 2: callers have got to say.
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  Speaker 4: But thank you very much for your time, pleasure, thanks
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  Speaker 4: for having me.
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  Speaker 2: That is Jeremy Williamson, the head of Private Wealth and
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  Speaker 2: Markets at Craig's Investment Partners.
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