Press: Property ownership

View original article (PDF) published in Scoop Magazine – Issue 66 Summer 2013 2014

I’ve never owned a house, and I don’t plan to. The idea of paying triple the price for a restrictive stack of bricks seems silly to me. While owning property probably made sense to your grandparents, and maybe even your parents, it just doesn’t make sense in today’s world. And it certainly doesn’t make sense if you want to use your entire capacity as a human being.

While I haven’t bought a house, I definitely haven’t been slumming it. I’ve lived both short term (a few months) and medium term (several years) in some of the best places on Earth. In a penthouse apartment in Sydney’s Potts Point, I’d wake up every morning, stroll out to my balcony, and look over the gorgeous Rushcutters Bay. Living in a house built into the side of a mountain in Taipei, I got to immerse myself in the old Chinese culture, exploring the natural beauty (and hot springs!). Staying at a seven-star hotel in Beijing, I experienced the “new” China, with all it has to offer. And now, in a brand new townhouse right here in the Perth suburb of Doubleview, I get to see the beach from my home office window. These are just a few of the places in the list of dozens of cities and towns I’ve lived and worked in during the last 15 years.

Discarding the outdated idea of owning my own home has given me independence and peace of mind. Not to mention disposable cash. I’m constantly involved in projects that I care about and love. Why would I want the complexity and restriction of owning a house? What if my geographic location matters less than serving my clients? Not being locked in to a house has given me the freedom and flexibility to explore the world, and myself.

And it’s not just me. Nicolas Berggruen, billionaire philanthropist, has more than enough money to own properties in every major city in the world. Yet, he owns no property, no house, no car, not even a watch. He instead spends his time travelling around the globe and living in luxury hotels. Robert Shiller, Professor of Economics at Yale University, took a look at inflation-adjusted home prices between 1890 and 1990, finding that inflation-adjusted gains per year totalled around 0.21%. In the short, medium, and long term, and after inflation, property has been the single worst investment available to the general public ever. 83-year-old Warren Buffet does live in a house, the house he purchased in 1958 for $31,000. But, he didn’t build his billion dollar net worth by owning it!

The idea of owning your own home is deeply-entrenched in both the Western and Eastern world. It’s not just the Australian dream, it’s also a big part of the American dream, and the new Chinese dream! The government, real estate agents, banks, financial advisors, and other brokers love selling houses. They love when people buy them too. Why wouldn’t they? “Buying” a $1 million house with a mortgage usually means paying rent back to the bank in the form of fees and interest. This is usually in the order of three times the original purchase price!

Home ownership is a relentless cash drain, illiquid, immovable, unproductive (no dividends), fragile, and heavily taxed. Oh, I almost forgot, unlike gold or artwork, in most countries including Australia, you don’t actually own your house. Have a look under “property taxes”, “council rates” and “eminent domain”.

Just as I outsource graphic design, programming, and editing services, I also think of renting as outsourcing my housing. It’s somebody else’s department, and it is part of the new way of thinking. I believe in the idea of investing in myself first, and materials that can’t add value last. Bricks and mortar don’t even make the list.

Renting gives you cash in the bank, mobility to pick up and move somewhere else, robustness (it’s 1am, now repair my water heater!), and complete flexibility to live in different places at different times of your life. If you are an entrepreneur with a home office, a portion is also tax-deductible.

Property investing is dead. It’s completely illogical to insist that buying a house is the way to build an investment fortune, or to be of any real benefit to anyone living in our present world. A house is just what it always has been: a type of shelter. Instead, think of shelter in simpler, more flexible terms. An outsourced commodity that allows freedom, unleashing your time and effort to invest in something greater. Not just steel frames and bricks. The real you. ■