Have you been wondering when the best time would be to make an investment, be it in stock shares, property, or perhaps a new business venture? Well, if you’re a property investor, then we at Bartercard have good news. There has never been a better time to invest in property than today. Continue reading to find out why!
1. Low interest rates
By the end of 2018, interest rates in New Zealand were at their lowest recorded value since World War II. Gone are the days of 20% interest rates seen in the late 80s. Instead, rates are now hovering around the 4% mark at every major bank, and some are even lower. Now is the perfect time to capitalise on these low rates and take advantage of the potential savings.
While you will still need to service the mortgage payments without putting yourself under financial strain, lower interest rates make the idea of taking on a good loan even better.
A good loan does not mean one of a decent value. Rather, it is referring to the concept of good debt, wherein you borrow money to make more money. Any loan that you must service out of your own pocket is considered bad debt (though such debts are occasionally necessary). A good debt is one that doesn’t cost you. The loan effectively pays for its own cost. In property investment, this means that the tenants pay the cost of the loan (the interest portion, at least) so that it ends up costing you nothing to service.
2. Growing housing shortage
We know there is currently a housing shortage in New Zealand, particularly around the Auckland suburbs, which are reported to be 72,000 homes short of demand. However, people are still looking at the city as somewhere to live, not necessarily to buy but to rent, so they need a landlord.
By purchasing a home in a central Auckland suburb, renovating it to add value and then making it available on the rental market, you will have tenants climbing over each other to live there. On average, rental rates have been increasing between 3% and 5% each year, making your investment a sound one for the future.
3. Infrastructure spend
Auckland is a rapidly changing landscape. The Kiwi ideal of a 3-bedroom home on a quarter-acre section is fading into the distance as more and more people move into the central suburbs. Unitary plans and zoning for higher density housing are coming into effect, changing Auckland to a new kind of city.
All this change requires a spend on infrastructure which will in turn create more jobs, and more tenants needing rental properties.
4. The America's Cup
The 36th Americas’ Cup will soon be returning to New Zealand’s shores. In 2013, every property with even the hint of a waterfront view was snapped up. In fact, there were not enough Auckland properties to meet demand, so imagine what it will be like this time around? It’s likely to create a property and rental boon. Now is the time to invest, particularly if you find an opportunity with a waterfront view!
5. Policy change opportunities
The coalition government has proposed many changes to housing policy, everything from not being able to offset rental income to the potential for a capital gains tax. New policy proposals have even surfaced regarding tenant’s rights.
Many people have stated that this will impact the property market and encourage landlords to sell their current investments. There is a negative perception surrounding the proposed changes, but these proposed changes are also creating real opportunities to invest now. If you’re in the market to build a portfolio of value that you’ll hold onto long term, then many of the policy changes won’t really apply. So, seize the opportunity and snap up great properties now while competition is low.
How Bartercard can help build your property portfolio
Bartercard provides the perfect opportunity for property investors. Bartercard Real Estate enables its members to buy and sell properties with a trade component (minimum 20%) included in the sale/purchase price.
For those buying a property, by using trade dollars for part of the purchase price, members can reduce their cash borrowings, thereby reducing interest costs. For vendors selling property through Bartercard, a quick sale can often be achieved at the best price, with the flexibility of either selling it themselves or using an agent. For a property developer in the early stages of a multi-unit development, this can assist with making pre-sales to achieve financing, setting a strong benchmark price for further cash sales or, toward the end of a project, the ability to sell any remaining units without discounting the price.
This information is general information only. Before making any investment decision, you should consider talking to a financial adviser, and assess whether the information is appropriate to your particular investment needs, objectives and financial circumstances.
Sound property investment could provide an ideal way of using trade dollars to achieve long-term financial prosperity.