David Whitburn

Pavarotti’s memories will live on

After 40 years of Lucianno Pavarotti performing opera and 71 years of life Lucianno Pavarotti passed away today.  The sheer power the might tenor brought to Nessun Dorma (from Puccini’s Turandot) in the Soccer World Cup 1990 in Italy was enough to get me Interested in Opera.  I started learning the guitar the following year and actually asked my parents to join them at Opera and Musicals after that.  Whilst I love and prefer pop music, the magic of a night at the Opera canot be underestimated.  The history of previous performers and mesmering voice with full orchestral accompaniment is so powerful.  (Here’s Nessun Dorma live and made to be played loud – note go to http://www.youtube.com/watch?v=VATmgtmR5o4 if my 20 minutes of tinkering do not come to fruition and this doesn’t play smoothly first time)

Pavarotti also performed with U2 to sing Miss Sarajevo in 1995 that stormed the pop charts.  He was a strong supporter of charities and a true superstar of Opera and indeed the music industry.  RIP Lucianno.

Finance Companies going under

Yes many finance companies have gone under recently.  Listening to some Newstalk ZB talkback on my drive arounds (I do a lot of driving checking properties under contract, meeting clients on site, development professionals and contractors etc) I am concerned that many people think finance companies collapsing mean the market is collapsing too.

That is not the case.  The property market is not collapsing, and some commentators views that the market will fall by over 25% in the next year are sensationalist and over the top to say the least.   Sure the boom times simply cannot continue as they are now too far ahead of the underlying fundamentals, but a NZ collapse is most unlikely to happen. Yes, some investors and home owners have over extended their borrowing and do not have sufficient non rental income sources to cover their Mortgage payment, or face having to sell their properties.

It is no secret that some property owners are finding things tough at the moment.  I know an investor that had fixed 4 years ago $1 million of borrowing at 6.5% that is going to be refixed at 9.2%.  Yes they need to get another $27,000 per year to cover this increase that hits them next month.

Questions I have been asked by investors include – what happens to the money I have borrowed from my finance company which is in receivership?  Generally no issues here, your loan continues as is.  The receivers may try to revive their struggling companies, however they are likely to sell their “book” (your loan is an asset to them) to a number of well heeled parties that may sniff a bargin.  It may get taken over by another lender.

Will other finance companies fall?  Yes they will.  However the Securities commission has now stepped in and is seeking statements of finance companies health.  Some that have not provided such statements to date and that their are rumours about, are on thin ice and summer is fast approaching.

What happens to my money I invested with Bridgecorp/LDC/PFS/Nathans finance etc?  You may get it all back, but after receiver’s fees are paid (they are protected by law to be paid first, then secured creditors etc), you are likely to get back just a portion of what you invested, aka the Metropolis junk bonds from 2002.  My advice is look for reputable providers that you can trust or invest in property via a listed managed fund (eg Macquarie Goodman property Trust, Kiwi income property Trust etc).

So don’t worry too much about these finance companies collapsing.  The property market is not soaring up like it has in previous years – so lesser prepared people will be suffering more pain at the moment.  Also NZ will not have the lending issues in the sub prime market such as what happened in the USA recently.  The reason is the no financials self declared income products did not have the overly “keen” levels the lenders provided in the US – I am advised that one provider gave 100% finance with non financials and self declared income!  In NZ no financials and self declared income products were at much lower levels (typically 60-80%).

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