on rental property he states that the "fundamental, physical imbalance between the supply of and demand for housing ... is driven by growth

in the population on the one hand and growth in the housing stock on the other".

This statement is absolutely correct, however he ignores it and states "Investors are the key to driving up house prices".

The four main reasons for his opinion are:
1. Property investors are "marginal" buyers of property and set prices.
2. Auckland investors account for 46 per cent of Auckland sales, up from 37 per cent in 2012.
3. Rental property has a tax advantage.
4. Banks prefer lending money against property.


Property investors are not price setters in the main.

There is a limit to what tenants can or want to pay for a rental property, meaning providers cannot pay too much for a property.

The more they pay the higher the mortgage costs, the greater requirement to top up the investment, the greater their risk and the lower their return.

Property investors express dismay at the prices that home owners are willing to pay, due to an emotional attachment to a property.

In 2012, investors in Auckland made up a very low proportion of total buyers, so this is a low start point. As there is a historically higher proportion of tenants in Auckland, a higher number of rental properties are needed and so a higher number of transactions by investors.

Statistics can be used to paint a picture. Investors went from about 35% of purchasers in 2013 to 39% in 2016, while first home buyers remained about the same. However if you start in 2014, investors were constant at 39% and first home buyers increased from 17% to 21%.

Investors buy property to rent to tenants. If you restrict investors from buying properties you restrict the supply of homes for tenants.

Many people claim that rental property has a tax advantage, but it isn't true.

Fallow appears to have accepted this as he now says that the application of the tax system favours property, and therefore needs to change.

However shareholders and business owners can claim losses and pay no capital gains tax unless they are traders.

The rules are exactly the same for property investors and traders.

Rental property owners have disadvantages over other investments and businesses. It is up to individuals to evaluate the advantages and disadvantages of different investments.

If the advantages for rental property is so great, why do only 7 per cent of the population own rental property?

Why do more people own shares and businesses than rental property?

The final argument Fallow makes is that banks prefer to lend on property.

Banks have many years of experience in judging risk when deciding on who they will lend money to and how much they will charge.

Banks know that shares, businesses and other assets are a higher risk than property.

What they view as a higher risk should not be controlled because some people prefer one form of investment over another.

It takes all types of investments to have a successful economy. It includes shareholders, depositors, small business owners, farmers and rental property owners.

We compete with other property buyers, but that's because tenants need somewhere to live.

It is wrong to prioritise first home buyers over tenants.

Andrew King is the Executive Officer of the New Zealand Property Investors Federation.