Slowdown not a barrier to property investment

NEW SET-UP: enable.me director Kobus Venter and company founder Hannah McQueen in enable.me's new Gladstone Road office. Picture by Liam Clayton

New Zealand's property market slowing down should not mean an end to investing in property, Gisborne's newest financial advice company says.

Enable.me founder and managing director Hannah McQueen said for many, the ability to access leverage through property investment was still important for growing wealth.

“Some people want to get on to the property ladder or to buy an investment property — whether they should have an investment property depends on their actual circumstances — but if you need to grow wealth, you often need leverage, which in New Zealand is only readily available through property.

“No one should be buying an investment property for a short-term gain, they should be buying it for medium to long-term gains. We know historically over the medium to long term, things stabilise and then strengthen. If you take a macro view of the economy, we are at the inflation stage, then we will go into a recession or a low-growth environment, and then we should move back into economic growth.”

But that doesn't mean any old property is guaranteed to be a winner.

“If a client wants to benefit from leverage, then in that situation we are really specific about the criteria that work, and it's a lot tighter than it was even six months ago. To find a good property is becoming harder and harder, but the role of property hasn't changed.

“The other thing to note is that if they are not buying property then their only other mainstream options are to put money into the sharemarket or to leave money in the bank.

“If you leave it in the bank, you are going to lose 5 percent or more to inflation, and if you put it into the sharemarket, you are entering at the most volatile time. So, when you look at the risks of a particular asset type, you must also compare it with the other options available.”

The current environment poses different questions for those who need to sell down to help fund their retirement.

“They may have lots of assets, but they don't have a lot of income — so they're trying to solve a different problem, which can be stressful in its own right.”

Enable.me Gisborne director and strategic coach Kobus Venter said the Gisborne office opened a month ago and he had been “flat out”.

Mr Venter said clients' needs varied — they might be looking to get into the property market, need some “cashflow re-alignment”, want to get rid of their mortgage faster, be looking to build a property portfolio, invest in managed funds, or plan for retirement.

“It all depends on the age and stage, where you are financially — and what you want.”

Mr Venter, a former investment banker for Barclays, said there was a general lack of financial education in New Zealand and globally.

“Wealth is a language only a select number of people can speak, and they pass that on to the following generation. That's why I'd been looking to do financial education — and in my research I stumbled on enable.me.”

Hannah McQueen says now is a great time to be launching the business in Gisborne.

“What we know about enable.me is that it's a fairly recession-proof business. People think more about their money in a recession than they do in the good times.

“Kiwis are particularly good at not caring if things are going well — they only seem to care when they are stressed. The trouble is, when things are going well is the best time to try to maximise — but if it's not going well, that certainly provides the motivation to address it.”