Don't give up on the housing market. Get even. By that I mean buy other growth assets that will see your money appreciate and keep pace with inflation or better.
It's true that a good chunk of the population is locked out of the property market even if they forego takeaways and smashed avocado. Some just give up and start spending their money rather than saving.
It's not pointless. It's just that we need to change tack and invest in other growth assets, says James Wilson of property data company Valocity. He has a point that is often forgotten in New Zealand: property is not the be all and end all for growing your wealth.
Thanks to the 1987 stock market crash we're still suffering an intergenerational aversion to investing in shares, Wilson points out. Sharesies has single-handedly overcome much of that and is launching a new generation into share buying and the capital gains that come over time with it. Sharesies isn't the only share buying platform on the block. Alternatives include Hatch and Stake.
KiwiSaver and other funds
If you're saving into a growth fund you can expect to earn a lot more over time than leaving the money in the bank or spending it. There are times when shares and funds grow faster than property, although you don't have the option of leverage where you make capital gains on borrowed money. More and more highly specialised funds investing in everything from water technology to robotics are available.
Property funds and syndicates
Buying an actual house isn't the only way to make money in property. You can buy units in managed and listed commercial property funds. Or you can invest in syndicates that own one or more buildings. Like everything, there are modern takes on syndication coming from online platforms such as Jasper.io and Opoly. Do read the FMA's advice on syndicates here: Tinyurl.com/FMAsyndicates
Be careful. But some New Zealanders have made a great deal of money from buying and/or trading in bitcoin, ethereum and related digital currencies. Please don't, as I've seen people recommending, put the proceeds of your house sale in bitcoin. It can fall as much 80 per cent in a short period of time, says lawyer and cryptocurrency investor James Cochrane of Stace Hammond. One bitcoin, for example, was worth $90,018 on April 13 this year but fell to $45,458 on July 18 before regaining ground. Like other currency trading, there are risks. There is little regulation and protection, and in a worst-case scenario your investment can be stolen online. But there is money to be made, says Cochrane, if you educate yourself and employ standard investing techniques such as buying and holding over the ups and downs, not putting all your eggs in one basket, and other strategies such as dollar-cost averaging where you buy small amounts regularly smoothing over the volatility. More in next week's column about crypto investment.
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Buying or building a business
A good business will make just as much in capital gains if not more than a property. Of course, not all businesses are good businesses, and you do have to work hard. Not everyone is going to launch a company that will make the Deloitte Fast 50 index such as ElectricKiwi, Delivereasy, Ethique or Cadenshae. Capital gains can be made by improving an existing business you buy. Or even just buying into a good franchise with room to expand or improve. Another option, says Wilson, is convincing your employer to let you buy shares in the business. That can be a win/win. It makes you more committed to the business, you can earn more than just salary, and grow capital at the same time. Individuals can also buy shares in small to medium-sized businesses through alternative exchanges such as Catalist.co.nz and Syndex.exchange.
Over time as your capital grows, the property market will go through cycles and at some point, the stars could align, and you get to buy your own home after all.