Hot Auckland market drives regional investment
13 October 2015
HOT AUCKLAND MARKET DRIVES REGIONAL INVESTMENT
• Two-speed property market challenges first-timers and investors alike
• Regions feel the effect as investor attention switches away from Auckland
• Auckland-focussed investors finding opportunity in unpopular suburbs
“To find gold, look where others are not looking” is the advice to residential property investors as profound change sweeps the market.
Sean Wood of Auckland-based property investment mentor company PropertyTutors says a ‘two speed’ investment market is emerging in New Zealand. Many investors are now seeing the Auckland property market as overheated and are looking to the regions for their next investments. This change is also re-opening housing supply in the Auckland market, a positive for both first home buyers and investors.
Property values in regional centres have increased by up to 15 per cent in a year as attention switches to Tauranga, Hamilton and even Christchurch. In the Auckland market, affordability has improved by four per cent as interest rates decline and legislative measures dampen the market.
“So while the trend is now to look for opportunities in other parts of New Zealand – and people are certainly finding ways to add value to their investments by doing so – there is now a slackening in pressure on the Auckland market and that creates two-fold opportunities.”
Mr Wood says investors co-exist with first home buyers because they are looking for different things in the property market.
“Every week there are newspaper and television stories every week featuring unhappy would-be first-home owners complaining about Auckland’s unaffordable property market. But in our work with investors, we are seeing many people quietly building equity by buying up in less popular suburbs of Auckland,” he said.
Recent media and political attention on Auckland has created the impression that overseas investors have snapped up all the ‘best’ properties, but Mr Wood says all bidders drive the overheated Auckland market, and neither first home buyers nor investors should be looking at the prices being achieved at auctions in Auckland. Investors, he adds, often look more carefully at a property than first home buyers and are not wedded to buying in the ‘hot’ suburbs.
“Investors add value. They look for properties others will not buy, upgrade and improve them, and in the process they have a nett positive effect on our housing stock whether those properties are bought for rental or to return to the market for sale.”
Mr Wood says many investors are focussing on medium to long term returns.
“It’s much more difficult to get returns from high value properties – often bought at auction and on-sold in short order. Auctions in Auckland are seeing a measurable decline at the moment. I think it’s too soon to call this a trend, but certainly the property market in our biggest city has matured. Most investors are just looking for some guidance to get started or accelerate their investment activity,” he said.
To help equip investors with the knowledge and strategies they need and to update people on recent trends, law changes and policies affecting investors, PropertyTutors will hold Property Masters seminars in Auckland on 18 October and in Wellington on 8 November.
The seminars are New Zealand’s biggest one day property investing education and training events. They cover key property market trends, renovation advice and information, ways to find good deals in investment properties and strategies for getting value from rental investments in all markets.