NZ Herald 2 December 2023

ASounds like my first flat, on Tinakori Road in Wellington, with the loo across the back yard and the cold and damp everywhere. It burnt down soon after. Good riddance!

Nobody wants to go back to those days. Improvements like insulation and double glazing have not only made houses nicer to be in, but also healthier.

But modern houses are often unnecessarily large. In 1974 the average New Zealand house was 120 square metres. By 2010 it was 200. That’s a huge jump.

By 2019 the average had dropped back to 158 square metres — both because stand-alone houses had become smaller and there were more townhouses, retirement villages and so on. But 158 square metres is still nearly a third bigger than in the 1970s.

While houses here are somewhat littler than in Australia — which has the world’s biggest houses according to worldpopulationreview.com — we come second, slightly ahead of the US. Our average houses are nearly twice the size of German houses, and way more than twice the size of UK houses.

What fills up all the space? Most New Zealand houses these days have more than one bathroom and toilet, more than one living area, and three or four bedrooms. And rooms are bigger than necessary. Also, many have a double garage attached to the house.

Meanwhile, families are smaller than a generation ago, and our ageing population means more places house just one or two people. Back in 1886 the number of people per house averaged 5.2. Now it’s 2.7.

First homes don’t need to be so big. Children can share bedrooms, and one living room and one bathroom are enough.

The trend towards tiny homes might be a step too far for many people, particularly those with young children. But there’s a happy medium. Let’s see more small houses being built — and more families happily moving into them.

AI love bold visions. But while some people’s worries and stress would lessen, others’ would grow dramatically.

The bankers would probably go broke. And that would affect all of us. No government guarantee could cope with widespread bank failures.

And what about people planning to sell their home and move overseas — unless you are planning on the whole world doing this?!

Those borrowing against the value of their properties so they can invest in other property would presumably be okay, as you suggest. They could borrow less, but the property they were buying would cost less.

But what about people borrowing against property to fund a business? Or to get desperately needed medical drugs? Or to pay for higher education?

The trickiest part of all would be getting everyone to play along. This would obviously have to be enforced by the government, which feels awfully like dictatorship.

It’s a fascinating idea, but….

AIndeed. But, at the risk of seeming like The Great Defender of KiwiSaver Providers — at first, anyway — the points in the article are a bit worrying, for several reasons:

• The comparison with the NZ Super Fund is rather unfair. Firstly the Super Fund is investing for the very long term, so it makes sense for it to hold largely shares and other higher-risk, higher-average-return investments.

  Meanwhile, a large proportion of KiwiSaver members are either planning to spend some or all of their savings within the next ten years — and are therefore wiser to be in lower-risk funds — or they are simply more risk averse than the sophisticated Super Fund advisers. We would expect their returns to usually be lower.

• It’s never good to look at fund performance over just three months. Sure, David Chaston, who wrote the piece, addresses this by comparing the KiwiSaver and Super Fund performances over the same short period. But still, it’s only one period. I bet there have been other quarters — when share markets tumbled — when KiwiSaver outdid the Super Fund.
• The comparison with term deposit returns is tricky. KiwiSaver fund managers could, at least theoretically, move money to bank term deposits when interest rates are relatively high, but would that be a good idea? They could well be selling shares, bonds or property at low prices — a bad move.

  And when should they move back, given that over the long term returns on these other investments are highly likely to be higher than on term deposits?

  As I’ve said so often, people who time markets sometimes get it right, but more often they don’t, and end up worse off.

But KiwiSaver providers aren’t blameless. While disappointing KiwiSaver performance can be “blamed” to some extent on members for choosing lower-risk, lower-average-return funds than is warranted by their situations, providers could do more to educate their investors on this.

And it’s important to note that changes in total funds under management are heavily affected by fees. While some providers have made progress at reducing their fees, many are still charging too much.

The taxpayers of New Zealand — through the KiwiSaver government contributions that we all pay for — have handed providers a gift. These contributions have made investing in their products much more attractive. In exchange, providers should keep their fees as low as possible.

ACongratulations on the success of your property investment. It’s a great response to my story about losing 30 per cent on a house in around 1990.

But I wasn’t meaning to imply that my loss was typical, just to point out that it could happen. Perhaps I should have added that the house I owned before that nearly doubled in price in just two years, when we lived in Sydney.

My point is that property investment is hugely varied. Often it goes well, sometimes extremely well. But sometimes you lose — and that tends to be overlooked.

On sweating a property investment, you’re right, there’s scope to make changes that will enhance your returns in a way you can’t with shares. On the other hand, it takes time and energy. And all sorts of things can go wrong with a property, whereas a share fund investment just sits there while you go to the beach.

I’ve long concluded that both investments usually work well over decades — although either can go wrong, especially in the short term. Deciding which to choose is largely a matter of personality and interests.

Meaningful Christmas Gifts

Many charities offer Christmas gift programmes. You buy items for people in need that are given on behalf of your family or friends. For example, you might donate money for school equipment in developing countries. You receive an acknowledgement to give to your relative or friend to show what they have “donated”.

It makes a great Christmas gift — more meaningful than buying stuff for one another that is often not wanted.

Each year, this column runs a list of charities that take part in these programmes. I’ve asked each one to describe their programme in 20 words or less:

• Caritas Aotearoa New Zealand: 0800 22 10 22 or https://www.caritas.org.nz/caritas-gifts “Caritas Gifts of hope, life, peace, or learning enable our life-changing work in Aotearoa New Zealand, and around the world.”
• ChildFund New Zealand: 0800 808 822 or www.childfund.org.nz “ChildFund NZ: Gifts that Grow — life-changing help for children where they need it most, including Gaza and the Ukraine.”
• Leprosy Mission New Zealand: 0800 862 873 or www.reallygoodgifts.org.nz. “Share God’s love with people facing leprosy this Christmas; for as little as $10 for a pair of protective sandals.”
• MEND NZ — Mobility Equipment for Needs of the Disabled: 021 060 9631 or www.mend.org.nz. “Give African or Himalayan youth a limb to walk to school or hearing aid to hear for the first time.”
• Save the Children New Zealand: 0800 167 168 or https://gifts.savethechildren.org.nz/. “Give the gift of a bright future! From clean water to a school library, your Good Gift helps kids thrive.”
• Tearfund NZ: 0800 800 777 or www.giftforlife.org.nz. “Protect a child from human trafficking ($15), give a hen ($20) or goat ($55) or plant a coffee plant ($20)”
• The Fred Hollows Foundation NZ: 0800 227 229 https://giftofsight.hollows.org.nz “Give a gift to a loved one and the gift of sight to someone in the Pacific.”
• World Vision New Zealand: 0800 800 776 or www.worldvision.org.nz/smiles “From chickens to fast-growing seeds, you can help change a life this Christmas with a World Vision Smiles gift.”