Present state of the market Nov 2010

Posted on Saturday, December 4 2010

Yields on investment property continue to improve with static prices and increasing rents. In South Auckland it continues to amaze me the levels of rent being achieved for properties which can accommodate extended families. One example is a renovated 3 bedroom home and 3 room sleep-out with bathroom in a very average Mangere location just rented for $680 per week. Whilst the gap in house prices between low and medium cost areas remains large, the difference in rentals is minimal. Yields for single homes in lower cost Auckland areas are similar to the 3 year fixed rate of 7.1% but for home and income properties, and those with sleep-outs, positive Cash-Flow is probable. The building of new homes in New Zealand remains minimal, setting us up for an under supply which is likely to exist for years in the future. Flat prices, increasing costs together with scarce buildable land supply mean spec building is virtually non-existent. And builders at present have some alternatives – repairing leaky homes, securing earthquake related work in Christchurch or moving to Australia.

Overall buying a property is more favourable than it has been for some time with banks now starting to loosen the purse strings a little. It seems however that in many areas, buying at significant discount is challenging as the present affordability (relative to the last 5 years) means a lower number of forced sales. For those investors/traders not full time in property, good property finders are invaluable and over half of our investment purchases have involved them. Also make sure you are doing lots of networking in investment circle including you local property investors association.

Investors, do your homework and make sure your purchases have real equity, not a ‘discount’ from an unreliable Government Valuation or an inflated value from a generous (for want of a better word) Valuer. The tools available to the serious investor are extensive with street and arial views, sales info, infrastructure information etc. All extremely useful when analysing potential purchases but at the point of going unconditional should not replace a Valuers report by an experienced Valuer in that locality.

Rene McLean.

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Expert's Bio

Property InDepth Rene McLean

Rene McLean - Auckland Franchiser. Property InDepth is New Zealand\'s only fully franchised property valuation and property consultancy service. The only valuation service that can provide comprehensive reports to you, within hours of completing the inspection. So relax and enjoy the experience, that's what we are about.

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