The one group that can help fix our housing mess is the one group consistently overlooked in discussions about it.
Just the other day, Gareth Morgan asserted, “Property mania hurts our ability to build business and wealth”, arguing that the Kiwi love affair with property investment is not only making housing unaffordable for the average New Zealander, but also sucks valuable potential funding for New Zealand businesses.
Not surprisingly, reader comments generally seem to fall into two groups: property owners lamenting that investing in property is the only way to get a decent return on investment in New Zealand due to the dearth of attractive alternatives, and people who can’t afford to buy a home (let alone a rental property or three) because the economics of buying a house and raising a family in any of the main centres on the average Kiwi wage quite simply don’t add up.
Inevitably, the discussion degenerates into a heated debate about who or what is at fault: the government, the Opposition, our tax laws, the NZX, property developers, landlords, renters, immigrants… While the complaints and blame from all sides make for amusing reading, it generally leaves us none the wiser about how we actually solve these problems.
So what is an entrepreneur to make of all this?
It seems to me the one group that can help fix this mess (lack of investment opportunities, unaffordable housing, low wages, negative balance of payments, underperforming GDP), is the one group that is consistently overlooked in these discussions – probably because for most of the people doing the discussing, buying houses is the only way they know how to generate and store wealth.
Who am I talking about? That would be you – the bold and fearless entrepreneur.
* You are the ones who will build the businesses that will increase our domestic and export earnings, creating more skilled jobs and increasing our productivity, thus helping increase the woefully low average wage.
* Many of your businesses will at some stage need to raise finance, thus providing a wider range of investment alternatives for both early stage and retail investors. (Remember though, the average New Zealand investor is still an unsophisticated investor – housing and finance companies are what they know and love and more business-related investment opportunities won’t necessarily dampen their appetite for property. So don’t get your hopes up in raising money from them!)
* Your profits will contribute to government revenues, allowing them to invest more into helping the economy and employment grow.
* More money in the economy from the success of your businesses will result in more funds being available for new housing development, thereby helping address our housing supply problems.
* And as a very kind added bonus for househunters, in the pursuit of your business-building dreams most of you will have to invest all your money in your businesses, and will simply be too poor to afford a house unless you beat the odds and actually succeed!
So go forth and multiply, New Zealand entrepreneurs!
(Of course, the big question for entrepreneurs is: do you put off starting a business until you’ve secured a property or two, or do you invest in your business, and risk foregoing the family home, perhaps forever…?)
Richard Liew is founder at Espire Media. Read more on his blog here.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.