‘Zig when others zag’ in the housing market
Squirrel founder John Bolton gives his thoughts on the housing market and the challenges facing the mortgage broking industry. As told to
John Bolton founded Squirrel Mortgages at the height of the Global Financial Crisis in 2008, timing that he admits is somewhat mad.
He shares his own homebuying history and some of what he’s learnt from being in the property industry for the past 15 years.
What’s your role now?
I stepped back from the chief executive role in mid-2022, so I could do more of what I’m most passionate about – helping and advising clients.
There’s such a sense of delight I get with helping people through a tricky situation, or just successfully getting them into a property. It’s what I love.
By far the biggest challenge is time. With property transactions, everything’s so timecritical anyway. Then, you’re often holding people’s hands through probably the biggest financial decision they’ll ever make, which can mean lots of time talking them through things.
And as an industry, we’ve faced increasing regulation in the past few years, so being meticulous with all of that takes time as well.
The perception of mortgage advice as being a ‘‘free’’ service sometimes means people don’t really value our time and effort, which can be tough, too.
How did you get into the industry?
I’d spent 15 years in banking, mainly in head office roles like managing treasury and marketing. And I came out of that wanting to challenge the banks’ way of doing things and build something much more focused on consumers.
I didn’t have a lot of capital, so mortgage brokering seemed like the way to go. It was a huge leap of faith out of a cushy corporate job, basically into the abyss.
It was mid-GFC. The market was dead, established brokers were struggling – and there I was, trying to build my database from scratch having never met a customer before.
Back then, the internet was relatively new, and the industry hadn’t really figured it out yet, so that worked in my favour.
I leveraged that, and the media, to help grow the business.
‘‘Interest rates aren’t going to stay this high forever (and incomes always track upwards), so if you can afford it, stretching yourself into a good property right now is OK. John Bolton
Where is your own home?
My wife, Anna-Lisa, and I bought our home about 20 years ago – a 1960s brick-and-tile in Takapuna, overlooking Waitemata¯ Harbour.
It’s the house our girls grew up in and, for Anna-Lisa especially, it’s the place she wants them to always be able to come back to.
So, I’d say we’ll both go out in a coffins (hopefully after dying of natural causes).
I was a one-eyed Wellingtonian for years, only relocating (very reluctantly) with work. But I love Auckland now.
I’m lucky enough to live in Takapuna. It’s got so much going for it – close to the city centre, the beach, good schools. It’s Auckland’s answer to Bondi.
And the vibe is very relaxed.
I’d live in shorts, a singlet, and flip-flops if I could. In other parts of Auckland, you’d get looked at sideways for that, but go to the fish and chip shop in Takapuna and everyone’s in bare feet.
When and where did you buy your first home?
When I met Anna-Lisa, she owned a house in Wellington. We lived there together for a few years, and it eventually became ours.
But my first home as an actual buyer is our current home. We paid $795,000 for it, which was a huge stretch for us at the time. It hurt. It had a granny flat underneath, which we had to rent out just to be able to cover the mortgage.
It’s lovely now, but when we bought it, it was so rundown it looked abandoned. We relied on family and friends to help get the superficial stuff done, and then did the rest as we could afford it, which meant eight years without a functional kitchen.
And it all paid off because we found something we loved, and we’ve been happy there since.
What’s your advice to firsthome buyers right now?
With house prices having fallen, there’s really no better time to be in market. You don’t have to rush, because the market’s not going anywhere, but just be on the lookout.
I’d also encourage people to think about buying somewhere they’d be happy longer-term, rather than something they’ll want to move on from in two- to three years.
Interest rates aren’t going to stay this high forever (and incomes always track upwards), so if you can afford it, stretching yourself into a good property right now is OK.
Don’t be stupid but get creative about how you could make it work – like a house and income scenario.
The other reason for that is that, moving forward, we won’t see the same capital growth we’ve seen over the past 20 years.
There will be growth, but not like we’ve had. And without that buffer, the real estate costs associated with buying and selling every few years will really eat into your wealth.
What are the benefits of building new?
I think it’s a very Kiwi thing to want to design and build your ‘‘dream home’’. I’ve had a failed attempt, spending heaps on architect plans that never went anywhere because I couldn’t afford to build the house.
And that’s the thing. Building new is prohibitively expensive. In this market – where secondhand properties are selling well below build cost – it makes far more financial sense to buy an existing property than it does to build.
What are your comments on the state of the market right now?
Earlier this year, it didn’t have a pulse. After the Reserve Bank’s big OCR announcement in November, people got spooked and stepped out of the market. Higher rates really scare people.
But the need for housing doesn’t change, and once people adjust to the shock, they come back again. We’re seeing that now, especially as signs increasingly point to interest rates starting to stabilise.
I think price falls are largely done but will still be reported for at least another three- to four months. It’s a good time to be in the market.
Do you have any other general advice for people, based on your experience in property?
Warren Buffett [American business magnate] said it first, but if there’s one thing, it’s to zig when others zag. It’s true of the share market, and it’s true of the housing market.
It often doesn’t play out like that. We’re herd animals, so FOMO sees us all rush in when house prices are going up, and when house prices are falling we’re all too afraid to buy.
But if you’ve got the courage to do the opposite – buy when others are selling and sell when others are buying – it’s a good strategy.