Me and My Money: Jarrod Kerr, chief economist, Kiwibank

Kiwibank chief economist Jarrod Kerr
Kiwibank chief economist Jarrod Kerr says although New Zealand's housing shortage is complex, there are ways to make housing more affordable. Photo credit: Supplied.

"The problems surrounding the chronic Kiwi housing shortage are so complex, you wouldn't know which direction to fire the silver bullet. 

"What we need is a gatling gun loaded with silver bullets!"

Jarrod Kerr, chief economist, Kiwibank.

Money. It's the driving factor behind many life choices, but is it the be-all and end-all?

'Me and My Money' is a regular feature that investigates Kiwi attitudes towards money and what drives the choices they make. We also share their biggest learnings from COVID-19.

Newshub spoke to Kiwibank chief economist Jarrod Kerr about enforcing saving by borrowing money to buy assets, splashing out on skateboard equipment and three ways to increase supply of affordable housing.

1. Are you a saver or a spender?

I consider myself to be a 'leveraged investor' (a forced saver). 

Without a mountain of debt to keep me focused, I'd be on the next flight to a mountain somewhere with a backpack and a good pair of hiking boots.

2. What can people learn financially from COVID-19?

Unforeseeable events happen more regularly than not. 

I have a close friend who was severely impacted by the border closure. His tourism businesses have been hit hard. 

Had he asked my thoughts on the tourism industry three-to-four years' ago, I'd have said nothing but clear skies. And now tourism is in its darkest days. But I've been amazed at his ability to swiftly change landscapes. 

As the All Blacks say over and over, 'We must constantly adapt'. Our incomes are never as stable as we would like them to be. 

Always have a safety net: a few months' worth of savings, income protection and/or a second source of income. 

3. Is there a 'silver bullet' to fixing lack of housing supply and out of control house prices?

The problems surrounding the chronic Kiwi housing shortage are so complex, you wouldn't know which direction to fire the silver bullet. 

What we need is a gatling gun loaded with silver bullets!

Firstly, we need to break the bespoke housing model. Bespoke is expensive and inefficient. 

Secondly, we need to scale up and build multiple, prefabricated dwellings at the same time, using the same design. Think of the beautiful, old terraced houses in Sydney (Paddington). Built 100 years ago, they stand the test of time and define the era in which they were built. We need similar architectural beauty applied to lower cost, higher density dwellings for today. 

Finally, we need councils to be properly funded to provide the big-picture infrastructure investment required to meet the challenges of higher density cities.

4. Give an example of a recent purchase that you consider was great value for money

I bought a bunch of equipment from NZ Boxer. 

I've always liked Adidas, Lonsdale and other 'well known' international brands. In my opinion, these brands have become cheaper in terms of quality. 

Our own Kiwi brand is simply better.

5. What was your last impulse or 'fritter' purchase and how did you feel about it afterwards?

My son is showing an interest in skateboarding. 

I went on Trade Me and loaded up two skateboards (one for Dad too) and two skate ramps. I almost snapped myself in half attempting the ramp. Apparently muscle memory doesn't go back 30 years…my wife hasn't stopped laughing!  

I feel good about the purchase. But I'm in a world of pain.

6. If you have spare cash to invest, what's your preferred form of investment and why? 

Spare cash? I haven't had spare cash in years. 

If I won Lotto, I'd pay off all debt and give the rest to a fund manager to invest on my behalf. 

I wouldn't touch a cent of the winnings. But I'd spend all the income off the winnings.

7. Does having more money increase happiness?

Of course not. But it does help you buy the stuff that makes you happy. 

Financial stress must be a leading cause of many marital and mental health issues. My darkest days have coincided with financial stress. So the counterfactual is very true. Having no money causes stress and sadness.

8. The best money advice someone's ever given you?

Some of the traders I worked with at JPMorgan in 2004 said as housing is an asset class, people fall into one of three categories:

  • Long (own more than one property).
  • Neutral (own a property). 
  • Short (paying off someone else's property). 

'Should you be long, neutral or short? You're an economist - run the numbers,' they said.

I ran the numbers...going 'long' or at least 'neutral' is hard to beat over time.