We’re now seeing more ‘Mum and Dad’ investors eager to get into the property market, which is definitely helping to hold house prices up, says Century 21 New Zealand Owner Derryn Mayne
The arrival of ‘Mum and Dad’ investors is understandable given many factors now at play.
The cost of borrowing is at record low levels; poor bank deposit rates are driving people to look for better returns; rents remain strong nationwide; the Reserve Bank has temporarily removed LVRs meaning 30% deposits from most investors are no longer required; and investors are increasingly hopeful they can snatch a bargain.
A joint report released this month by REINZ and independent economist Tony Alexander revealed one in four New Zealand agents say they are noticing more investors in the market. At the same time REINZ’s latest Monthly Property Report showed 11 out of 15 regions have experienced median price increases on the previous month.
Our Century 21 offices are reporting more enquiries from the likes of city investors now taking a greater interest in the regions. Given the ongoing strength of our regions, this makes perfect sense.
According to the REINZ and Alexander report, Auckland now has on average the lowest annual rental yield with capital growth slowing, while the likes of the Manawatu-Whanganui region continue to perform strongly for residential property investors both in yields and capital gain.
Feedback also indicates that retirees are shying away from commercial building investments and syndications given the economic fallout from Covid-19 and ongoing uncertainties facing businesses and retailers.
Increasingly, residential property is looking like a good place to put your money. Housing demand still outstrips supply and sale prices continue to defy any doom and gloom. While rents in some areas will no doubt soften, the returns remain way better than bank interest and of course solid capital gain will always be delivered in the medium to long term.
Some retirees presume they can’t borrow money, but many could be pleasantly surprised if they can show secure projected income from a rental investment they’re keen to purchase.
Owner of Century 21 New Zealand