Real Estate character Investment Series: Focus New Zealand 2007

Real Estate character Investment Series: Focus New Zealand 2007




Consider thisDecember 2005: the world’s character experts are predicting that 2006 will be a bad year for New Zealand’s housing market because affordability has gone from the market, first time buyers are idle by an inability to provide to buy and interest rates will have to rise to cool the overheated character market.

And consider thisDecember 2006: despite the fact that average house prices grew by well in excess of 9% in 2006 the market is overheated going in to 2007, interest rates will rise and next year will be a bad year for character investment in New Zealand…

Yes, it’s been the same story for two years in a row, seemingly New Zealand’s character market has reached the point where it is over priced and where market movement is now restricted because no one can provide to move or go into the marketplace.

But what about the fact that month on month, year on year prices are nevertheless climbing? Albeit at a much slower rate than they were a few short years ago – but they are nevertheless climbing…and the reasons they are climbing include the fact that need remains high across the country, there is yearly an inward migration of specialized and affluent international expatriates seeking employment and citizenship in New Zealand who bring new money and interest to the market, and tourism numbers in New Zealand are growing unabated.

All of these factors and more will average that in 2007 the character market in New Zealand can and will bring an investor profitability in terms of rental yields and inner price growth, and that for the longer term New Zealand’s residential market place is a great place to invest.

The only possible fly in the ointment is the fact that the save Bank of New Zealand are considering again pushing interest rates higher in a bid to slow the character market, reduce speculation and reduce inflation – and this risk is real and it could rule to a slowing of the market from 2007 onwards.

But a slowing of the market does not remove an investor’s ability to profit! The meaningful to making a profit in New Zealand is being clear from the outset about the investment approach an investor is taking. For example, an investor buying to let to the tourism market will be seeking a different kind of character in a different area to an investor who prefers to buy stock in an up and coming area that is currently undervalued compared to its expected value when infrastructure or employment prospects have improved in the immediate vicinity.

Understand that there will be room for price expansion and strong need for character stock in New Zealand in 2007, but also understand that you have to think carefully about what you buy and where you buy and the investment approach you are trying to take.

In a softer market like New Zealand’s it is harder to make a profit but it is certainly not impossible. Here are two examples of how to profit: –

Buying to Resell – In Auckland average character prices are currently in the vicinity of NZD 446,000 – but at the lower end of the market there is a new wave of first time buyer interest which is being fuelled by a number of edges which have eased mortgage lending criteria. This new consumer base provides an investor with a great opportunity. They can consider buying up auction stock or the worst similarities in a particular area where there is a definite reason to reside – such as transport links or good school – and then renovate similarities and resell them back to the first time buyer market.

Remember, target who your buyer will be, examine what their affordability restrictions are and what they will be seeking for their budget and then provide them with what they want.

Buying to Let – A very good different for an investor looking at character in New Zealand is buying for the rental market and this different becomes more attractive in 2007 when Building Issues Minister Clayton Cosgrove should have his comprehensive series of legislative amendments to past tenancy acts enacted. His changes will make the complete rental market safer and fairer for both landlords and tenants from 2007 so an investor can have already greater confidence in the rental market which is already expanding rapidly due to the fact that there is an affordability issue affecting many first time buyers meaning there is greater need for rental accommodation across the country.

Basically New Zealand has a mature real estate market where profits will continue to be made if those buyers looking to go into the marketplace in 2007 look carefully at what their target market wants and then ensures they are not buying over inflated stock in areas where need and affordability are dwindling.




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