NAB's former chief economist defends ‘buy a good property' tip following backlash
A comment by NAB's former chief economist has been criticised for being out-of-touch, but Alan Oster disagrees that his wealth generating strategy is only for people who are already rich.
Mr Oster, who retired from the bank as chief economist in March after 32 years in the role, was quoted in the Australian Financial Review as saying: 'Buy a good property and hold it, is basically the bottom line'. He said he tended not to sell under about 15 to 20 years.
Mr Oster's comments followed the sale of his five-bedroom home in Melbourne's affluent suburb Brighton, which was said to sell for about double the 2012 purchase price at $5.5 million, but Mr Oster tells news.com.au that figure is incorrect. He did not disclose a different price.
Alex Joiner, chief economist at IFM Investors, described the advice as 'a misstep'.
'People struggling to afford a home likely don't want to be told by a Brighton resident (and owner of Portsea property as noted in the article) who has had a very high income for many many decades, the benefit of structurally lower interest rates, financial deregulation, multiple enormous property booms and discounted rates and fees from his employer what they have to do to get themselves a home,' Mr Joiner wrote on X.
Property research analyst Cameron Kusher, who was the REA Group's executive manager of economic research until this year, also took aim at the advice.
'Most people could only dream of owning a Brighton home,' he said.
'Most people buy at much lower prices in much worse locations and prices have not risen like they have in Brighton.
'The fact that a long-term chief economist's advice is buy a good property and hold it kind of highlights what is wrong with Australia's mindset and how we view building wealth.
'His advice hasn't been wrong for a lot of people over recent decades but that doesn't mean it will be correct going forward and doesn't really mean financialising sheltering what we should have done.'
The Australian Financial Review 's Rear Window editor Mark Di Stefano compared Mr Oster's comment to a famous meme of Paris Hilton wearing a singlet that says 'Stop Being Poor'. (Hilton's actual shirt read 'Stop Being Desperate' but the edited version is much more well known).
Mr Oster told news.com.au he was not giving financial advice but had shared his own 'philosophy', which he had used for the last 40 to 50 years.
He described his approach to housing as a ten-year proposition and argued that buying now or in six months time was actually irrelevant.
'Buy, if you can, better quality,' Mr Oster said. 'Do your homework, get your building report, you don't have to do renovations straight away, but over time you can and don't be rushed.
'There is an element of 'you buy worst house in best street'; I think that's still true, and you sit around over a long period and do it up the best you can.'
He added: 'Look for the best structure.'
As for whether it is a wealth-building strategy only possible for a small percentage of Australians, Mr Oster disagrees.
'When I started out, I didn't have any money,' he said. 'And that's sort of what I've done all my life. I try and buy the best house I could afford and keep it and do a bit of renovation on it, and gradually through time that's helped.'
Mr Oster told news.com.au he 'started at the very bottom'.
'I grew up in Newcastle, which was not a wealthy area and then I went off into Federal Treasury in Canberra and was a real struggle to survive,' he said.
The first property Mr Oster bought was in Canberra with the help of his parents in the early 1980s.
He said it was 'very, very cheap,' being a 'crappy house' in a reasonable area.
He ended up selling that property to move to Paris, but said he applied his strategy of holding on to property for at least a decade in the years after he returned to Australia.
Mr Oster predicts Australians will see a cash rate around 3 per cent late this year or early next year. However, he doesn't expect a rate cut at the next RBA meeting in July.
'Count on three more rate cuts, provided the world doesn't blow up, but three more rates cuts is something you could factor in and then after that I think probably rates will hold for a while,' he said.
The official cash rate in Australia is currently 3.85 per cent after a 25-basis point cut in May.
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