Quantum Wealth Summary

 

  • We look at strategic safe havens from monetary erosion by inflation.
  • How might rental property investment stack up compared to listed shares?
  • Does it make sense to build houses in an inflationary environment?
  • The surprise investment moves of some our largest institutions and developers.
  • The potentially undervalued property business we are currently investing in — and why.
  • Plus, coverage of 7 other high-potential companies.

 

 

Growing up, my parents built about seven houses. You can’t blame us for the housing crisis.

I’m familiar with the process. Visiting concrete slabs framed up with rooms. Shouting beer for the builders after the roof went on. The anxiety over being weather-tight before New Zealand’s wet winter. Living in homes still awaiting curtains, landscaping, or painting.

 

 

This business is housing thousands of people using low-cost modular housing. More on the opportunity in this report… Source: Financial Times

 

 

There’s something special about the process. Getting a home the way you want it, at least within your budget. And that fresh carpet and wood scent when you first move in. Better than any new car smell.

But I would struggle to build my house today. About 100 years old, it has high ceilings, native timbers, and lengths of ornate joinery.

Still, I have the building bug. A desire to create and improve. Even when things are good enough. Maybe it’s in my blood.

The old place seems in a state of never-ending renovation.  And I was looking at building a new house further out. Perhaps for holidays, rental, or Airbnb. Though beware of Airbnb council rating adjustments if you let 28 nights or more in Auckland.

I was bullish about building under the new tax rules — interest deductions for 20 years on renting.

Until I spoke to a homebuilder.

‘Well, the sooner you get a fixed price locked in with us, the better,’ he said. ‘We’re seeing cost increases on materials of at least 1% a month.’

Perhaps this was just an urgency tactic? To have punters progress their builds sooner?

But the more I asked around, I realised rapidly rising costs are part of the post-Covid shock.

Then there are the shortages. Waits of up to 40 weeks on weatherboards.

Rising prices aren’t confined to construction. They’re spreading like a rash across most developed economies. The virus has been both a health and economic emergency. The economic ventilator is easy to apply in unlimited fashion.

It has come in the form of cut-price, fast-issued cash via central bank easing and government stimulus payments.

As for the end result, we’ve been here before. Cost pressures lead to inflation. Inflation can savage asset prices. Money in the bank erodes. For many, it’s like living beside a cliff where half the edge has fallen away. You have to keep scrambling just to stay level.

 

Is there a safe haven from monetary erosion?

 

I’m seeing a remarkable strategic move. Large financial and property businesses setting up buy-to-let housing operations.

I’m going to cover this in more detail in a few weeks’ time. And look at whether it could be worth investing in any of these companies.

For now, I want to add to our usual mix of analysis of shares and companies: rental housing. Or just housing itself as an investment.

Is it really time — here in Australasia or amidst other growing populations — to ‘build like the boomers?’ Or are there better investment foils against the ravages of inflation?