You will have heard that the Auckland property market has changed since the LVR changes took effect in October 2016 for investment property and home buyers.
Now interest rates are beginning to increase and associated tighter credit is slowing the investment property market.
More and more properties are passing in at auction and sale and purchase contracts are falling over because buyers cannot secure finance sometimes at the last minute.
Always beware of taking too much notice of the media but in this case we should note that ANZ chief economist Cameron Bagrie, said recently, “The game is over, for the Auckland housing boom due to rising interest rates and higher borrowing costs”.
Note that in contrast, Property Institute of New Zealand chief executive Ashley Church said, “Recent indications of price softening in the Auckland housing market are unlikely to bring much relief to first home buyers and will almost certainly make the housing supply problem in Auckland even worse.”
Let’s put aside the noise for a minute and ask ourselves objectively, “Is now a good time to purchase investment property?”
The answer depending on your situation could well be YES.
If you have a good stable income then here are three reasons to purchase an investment property:
There are more properties on the market meaning you can negotiate a better purchase price. Also, you can take the time to source the right property which is a luxury we haven’t had for some time. Because the banks are so tough there is less competition giving you a further buyer’s edge.
New Zealand’s population, popularity and economic successes continue to soar. Supply is not keeping up and house price increases are in line with other countries. While properties certainly feel expensive why wouldn’t they be worth double in another ten years. It would be a brave person to say that history is not going to repeat itself
Several years ago earning $40,000 per year was a great wage but not anymore. As people earn more they can either pay higher rents or take on a bigger mortgage. Both lead to increases in the price of land.
What will you do when the market turns fearful?
Will you listen to economists and the media like in 2008 and 2009 and do nothing?
Or will you become a “fearless” property investor.
Do your numbers and put in place a safety net to handle higher interest rates.
And please remember, long term buy and hold investing always wins in the end.
I have been a property investor for over 13 years and have created a multi-million dollar portfolio including residential and commercial. I could go on about this but I’m not here to impress you but to impress upon you that YOU TOO can create wealth through property whether that be $100K or $5 million. I've been through the boom - bust - boom so I know what it takes to stay in the market. I live locally in Otahuhu with my wife and new baby boy. I love to help and teach people about buying well and for long term. We can all make a quick buck but the real strategy is creating long term wealth.
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