Investment Advice, The Aucklander
Thursday July 16, 2009
by Tanya Kwasza
Property like anything is cyclical. It swings from being the investment darling to being the investment leper. There are two main fears in investing in property. One is not having a tenant and the other fear of late is that your investment will drop in value as we have with seen with all other major investments. Yet there are still people like myself that continue to say that it is a good time to invest. Almost daily we are seeing a shift from a negative perspective to a positive take on property investment. Only this week Michael Lang NZ Funds chief investment officer who oversees $1 billion in assets encourages us to reinvest back into shares and property due to the threat of inflation as a response to the recovery efforts to prevent a prolonged recession. Effectively this would devalue cash savings and increase the value of real assets such as property.
If you were to start investing in property again or the first time it is important to have a clear overview of current market forces. We read of an increasing population and there has been a rapid and continuing increase in net migration. This means a strong demand for housing particularly in Auckland which has been internationally listed as the 12th best city to live in the world and the 4th most affordable!!! It is encouraging to know you are investing in a location that has huge international value and worth.
The issuing of building consents has never been lower since the 1960’s! Both ANZ’s and BNZ’s economists are predicting housing shortages in Auckland. In fact Tony Alexander from BNZ is recommending that a select committee needs to be appointed by government enquiry to resolve the issue!
There is a massive drop in the number of properties for sale. The latest Property Press was one of the skinniest versions ever. It appears that we are on the verge of the market turning from a buyers’ market to a sellers’ market. QV reports that the year on year national house price decline has reversed from 9.2% in April to 8.1% in May indicating that prices are heading back up. Tony Alexander predicted that the last of the bargains will be gone by the middle of the year .Good quality properties in good locations are not being dumped and sold for a song! With interest rates low and predicted to stay this way in the foreseeable future people can now afford to keep their properties. They have battled and hung on and now there is respite with the drop in interest rates and the properties are neutral or even cash flow positive so no longer a drain on cash flow. This is an exciting time when we are able to show you investment properties that put money back in your pocket and this is with 100% financing providing you have strong equity in your current home.
We have spoken for a while about this being a time of opportunity and for those that sit back and wait some more they will be faced with little stock to choose from, competition and probable price increases due to demand. However in order to invest you need to be sure that you do have job stability, that you have a financial buffer to cope with any possible vacancies and it is important to get the right property.
This is where Catalyst2 comes in. We live and breathe investment properties. We source new properties in good locations. These are built to the latest specifications and of course new which are going to attract tenants. We work with major builders and assist them in designing excellent investment properties e.g. the right number of wet areas and the right size to get the maximum yields. Buying new means that you are maintenance free for a very long period and there is comfort of building warranties and guarantees if you deal with major builders. I look forward to hearing from you to assess your current situation and to look at a strategy for moving forwards.
