Areas for Investment Homes

Moorf · Posted: Sun Jun 27, 2004 5:03 am Post subject: Areas for Investment Homes

Does anyone on this forum know what areas of NZ are ripe for investment in property?

No good investing in the UK property market so perhaps we can make some money buying and renting property in NZ?

All comments welcome including "you're mad", "don't do it" or "I have a great property you can buy cheaply" !! Laughing

Robert · Posted: Sun Jun 27, 2004 11:46 pm Post subject:

We have given this one a fair bit of thought.

Lots of people buy houses to let here as even though rents will not cover any reasonable mortgage, you can set your losses, including devaluation, mortgage interest etc off against your PAYE tax liabilities. Many people treat the money they do have to put towards the property as their pension contribution. It is very tax efficient to use equity in your main home to purchase rental property for the same reason. There is no capital gains tax here.

At present a fair number of kiwis, faced with an impossible amount of student debt and huge required deposit for a house are opting to take advantage of the low price of rental and spending the difference. This could mean that prices will fall as first time buyers drop out of the chain or it could signal the start of a Germany type situation where renting is the norm and a few rich landlords own half the country. the former is more likely on historical grounds.

Mortgage rates are currently the highest in the developed world at about 8% (special deals will reduce this a lot) being predicted for the end of the year.

There is a lot of un tenanted property at present, which may remain an issue for some while if immigration numbers remain low, especially among the Chinese who seem to favour Ch Ch and renting.

I doubt there is any advantage in buying early (certainly not in the next few months) I would advise caution, keeping all options open and accept that you may miss out on a small gain if the prices do continue to rise, but would be protected from an even larger loss if they fall.

Bear in mind that with interest rates on term deposits (very secure) from 5.5% for 3 months tie in and from 8% (if you can handle a modest risk) you may be better off investing as cash.

In any case, NZ is crawling with financial advisers just waiting to be your very best friend in all the world. They truly do the personal service superbly here!

Bill B · Posted: Mon Jun 28, 2004 4:02 am Post subject: Re: Areas for Investment Homes

[quote="Moorf"]Does anyone on this forum know what areas of NZ are ripe for investment in property?

Hi Moorf,

Have a quick look in the online NZ newspapers. I scanned a few recently and noticed a fair number of areas (mainly coastal) that are having a lot of new building work going on. I would have thought that (some) coastal areas would be best.

Bill B