Investing in Property – is it a good idea?
I think investing in property is a good idea generally, particularly for the longer term in areas with good jobs and population growth. Over a longer term property almost always increases in value; so does rent so this will provide you with cash flow sooner or later. Property prices in NZ are increasing in most areas at the moment with a lot of investment interest. There has been a marked increase in immigration over the past year which has pushed prices up with more people looking for property to buy and rent, and this level of immigration inflow is set to continue. Interest rates are historically low and are expected to stay low for some time.
There is uncertainty with economists trying to predict what conditions will prevail in the future because of weakness and volatility in international markets. This of course can have an effect on any type of investment, so it’s best to spread your risk and invest in different areas and asset classes. There are predictions that the Reserve Bank will impose further lending restrictions later this year to curb property price inflation. This may be an income to debt ratio, or higher level of deposit required for investment property. At this stage however, you need 30% deposit to purchase an investment property in Auckland, whereas there are no restrictions for investors in the rest of the country that differ from owner occupier buyers, except that banks try to give priority for low deposit loans to first home buyers and owner occupiers.