While global markets bounce back, the New Zealand economy and share market looks to be battening down the hatches for a long, cold winter. Skies are dark.

The recovery from the pandemic seems to be taking much longer here.

I once lived in an apartment in Europe where the copper piping had allegedly been sabotaged by a rogue plumbing company. I came home one day to find water gushing out the front door. My neighbour had an insurance excess of $50,000.

Did the last government damage our pipes?

Reader, as you know, we mainly report on global opportunities. We find broader industries and deeper growth prospects offshore.

But I’m also a believer in buying when it is dark. Right now, in New Zealand it is very dark and that could present opportunity. Particularly, as help is on the way.

The tax cuts announced last week will incentivise people and businesses to work and produce a bit more — though they didn’t go nearly far enough to redress inflation.

Public-service cuts will reduce government profligacy. They will allow redeployment in more efficient private enterprise.

All this should be somewhat deflationary. That presents the option for interest rates to fall and property values to restore.


Remuera, Auckland. Source: Wikimedia Commons


In 1998, I graduated from Auckland University. Thanks to my investing and business activities while studying, I also came out with a house deposit. Not a bad result for a country boy from Hawera.

After graduating, I was flatting in an old villa in Remuera. The weatherboards were rotten through. The place was falling apart.

Within a year, I was ready to buy my first home. There were two options:

  • $200,000 house in Royal Oak (a less prestigious suburb). CV today: $1,280,000.
  • $420,000 house in Remuera. CV today: $2,375,000.

Both were old bungalows and needed work. By CVs, the Royal Oak property increased 640%. The Remuera one 565%. (Though it needs to be said that both are unlikely to sell for their CVs in today’s market. In fact, one is priced 16% below).

Remuera would have involved a very challenging mortgage. So I bought Royal Oak and invested surplus equity in stocks instead. Fortunately, these outperformed the property market and more than made up for the difference.

The point is, back then, there was value on the table, both in property and equity markets. And contrary to popular belief, both offered reasonable leverage possibility of 50% to 80%.

Well, Auckland property has now fallen 20.13% from the peak of the market in November 2021 through to March 2024.

Over the same period, the NZX 50 has fallen 8%. But listed property has fallen further.

Is there latent value again? Let’s take a look…


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