A review of things you need to know before you go home on Friday; meaningful rate changes, developer jailed, uncertainty's impact, trust in Parliament, CNY rejected, swaps and NZD little changed

.. productive assets are not encouraged in NZ ... they're not sexy ... we want houses ... just endless chatter about the Kiwi housing market ...

David C. & the team know what their audience craves .... keep giving the addicts their daily fix of housing news and views ...

Oh im not so sure, property and stocks have long been pillars of building long term wealth.

Property markets can also fall. Share markets at least give you the opportunity to sell even in the bad times - no waiting months for an offer wondering if you've priced it right. Shares also tend to outperform property, as a reward for the extra risk. They're different asset classes with their own benefits and issues - the most sensible answer is to own some of both as they aren't too correlated, even less so if you have part of your share portfolio invested overseas.

Most studies show equities outperform property, feel free to google if you're genuinely interested. All you have with property is the illusion of control - you're still a small fish in a big pond with no control over where the market goes in terms of rents or prices, or whether your houses are still standing after the next earthquake. There is risk in all markets whether you appreciate it or not, hence the beauty of diversifying. I have no investment which would cause me to lose sleep if it went to zero tomorrow.

You may want to read some articles about stock markets vs real estate in a crash.. you'll need to open your mind to the possibility that property isn't the be all and end all of the investment game. So somehow I doubt you will.

https://www.fool.com/investing/value/2009/06/12/the-top-10-depression-s…

" Despite the conventional belief that the Great Depression was a terrible time to invest, investors who bought stocks in 1931 -- just prior to a 71% market drop -- would still have broken even in less than five years!

And stocks that the average investor bought after they became even cheaper -- say, at the start of 1932 -- would have multiplied in value more than 15 times during the next 22 years:"

http://www.people.hbs.edu/tnicholas/anna_tom.pdf

This quote sums up the second link :
"Using new data on market-based transactions we construct real estate price indexes
for Manhattan between 1920 and 1939. During the 1920s prices reached
their highest level in the third quarter of 1929 before falling by 67% at the end
of 1932 and hovering around that value for most of the Great Depression. The
value of high-end properties strongly co-moved with the stock market between
1929 and 1932. A typical property bought in 1920 would have retained only
56% of its initial value in nominal terms two decades later. An investment in the
stock market index (including dividends) would have outperformed an investment
in a typical property (including net rental income) by a factor of 5.2 over
our time period."

and just for giggles read this one, it certainly implicates that when this current bubble goes pop the economy is in for a very hard time.. Nobody has jobs, nobody can pay rent..

http://www.nber.org/papers/w20501.pdf

You don’t control property as proved by your recent bursts of anger on this site The Boy. The RB and the government control property and can turn it on and off at their leisure. Hence your dislike of Labour who are about to intervene. And as experienced by Christchurch (now 17th in terms of property values in NZ) natural disasters can affect values. It pays to have investments in NZ and overseas, in different locations unlike yourself and to invest in several asset classes. I have and I sleep very well. Unlike you I can afford to holiday in places better than the Gold Coast.

Check with the quants the stock market & other forms of investment are reasonably good and outperforms property often. However there is a different factor in play with housing which is the opportunity to take on large debt at a low enough rate that can easily be outperformed for benefit. There is more technical work and complexity in the stock markets but not the level of debt you can borrow to invest on. Hence housing is the poor man's, mom and pop, investing level. Often not enough capital or financial skills needed beyond upkeeping property, something most households can handle. So sure you can make a bit by turning the debt wheel, but often leave most of it to just mindless ticking along. If you had more money or the ability to research you could be making better returns and support more productive forms of investment. But are you the man enough to?

THE MAN 2, you come across as an "Ï will believe it when I see it" kind of person.

The thing about property is that it can halve in value and you still have the privilege of maintaining it, paying rates and insurance. If you happen to have a mortgage, your bank is your Landlord and is in control. You are just a caretaker of the banks security. As we all know, property is not always liquid. Yes if the tenant pays, there is a dividend. These days, dividends are as paltry as overvalued shares and don't reflect the inherent risk and associated liabilities of being a Landlord. Globally there seems to be very little risk spread which historically serves as a warning it could all crash quite soon. There are virtually no buffers and the traditional tools of recovery next time around will have even less effect.

With the "too big to fail" approach, policy has simply delayed the day of reckoning and increased the likelihood and the size of the next correction.

For the time being its 4.27% interest monthly term deposits for me.