How property measures up
Page 1 of 2 5:00AM Sunday June 10, 2007
By Ann Newbery
New Zealanders are well known for their love affair with property - but has it really been a romance that has delivered the best results?
As he puts up interest rates to try to control the over-excited property market, Reserve Bank Governor Alan Bollard continues to decry the Kiwi obsession with bricks and mortar and our unwillingness to save. He insists that diversifying our investments is better both for the individual and the country.
So the Herald on Sunday has looked at how the homeowner would have fared had they invested in things other than residential property over the past decade.
We looked at the performance during this period of five residential properties currently on the market - two in Auckland, and one each in Whangarei, Tauranga and Wellington - and compared this to similar-sized investments in shares (New Zealand and international), term deposits, commercial property and managed funds. These are the results.
New Zealand shares
If the owner of a home in Alison Ave, Takapuna on Auckland's North Shore had instead put $200,000 (the property's 1996 CV) into a fund tracking New Zealand's top shares, it would have produced a 214 per cent return by 2007.
This means the $200,000 initial investment would have grown to $428,104, according to the NZX. This calculation encompasses the performance of the NZSE40 index from 1996 to 2003, and its successor the NZX50 from 2002 onwards. The return on shares does not meet the current asking price for the house of $569,000.
More
here .