Each year, we like to share our best places for property investment in New Zealand. Building an empire is much more than just saving up some money, buying a nice car, and hoping for the best. It’s about thinking for the long-term and ensuring you can meet your financial goals, whatever they may be.
Getting right into it. 2023 has seen some very big economic ups and downs. This has impacted the housing market and the New Zealand economy in a big way.
What is the current state of the economy in New Zealand?
We started off the year with looming recession headlines, so naturally we wrote an article about it: How does a recession affect me? We had plenty of clients, friends, and family reaching out to us, stirred up in a frenzy from the media pushing forward a particularly unhelpful narrative. New Zealand, for the most part, is relatively sheltered from the economic turmoils of the world, but it was no surprise that the NZX dropped down to 20% in some cases. Four out of five New Zealanders are investing, according to research presented by the Financial Services Council, so this would have caused stress for many households.
To manage the ever-rising inflation, the Reserve Bank of New Zealand (RBNZ) has consistently lifted the OCR (Official Cash Rate) throughout 2022. We started the year as low as 2.00, moving incrementally up to 3.50 (as of October 2022), meaning the cost of borrowing money is more expensive and mortgage and interest rates have jumped up.
The impacts of the pandemic, COVID, and the war over in Ukraine, alongside terrible supply chain issues has led to the cost of living and inflation skyrocketing, naturally making people tighten up their purses and not want to spend for fear there could be a housing market crash.
What about the housing market crash in New Zealand?
Again, headlines and the media frenzy had a huge part to play in this. Our interest rates dropped significantly during COVID to make sure people were spending and stimulating the economy, dropping as low as 1.99%! Naturally this type of super low interest rate in such a small country couldn’t last, so it has gone back up to pre-COVID levels. Even now, there are clickbait headlines saying “20% drop in house prices”. While this may be true, the headlines are often reporting on real estate sales (which is one small part of the data), and they are forgetting we had a 35% increase during COVID in house prices, which was unsustainable in the first place.
Where is the best place to invest in New Zealand?
Aotearoa might boast some of the most beautiful beach towns and coastlines the world has to offer, but your best bet is in the main cities, like Auckland, Tauranga, Christchurch, or Wellington. These cities are where all of the jobs are, and will be large enough and stable enough to ride out any threats or market volatility. Main cities house the proper infrastructure to host investment properties and developments, with public transports, social hotspots, and choices of schools, supermarkets, and shopping places.
What we’ve seen really fire up is the ‘Golden Triangle’. Hamilton, Tauranga, and Auckland are excellent for getting stable returns on your investment and are a relatively safe region. Christchurch has a great price point, but the EQC (Earthquake Commission) is still a point of concern so make sure you have the right insurance advice when it comes to that ever-changing city.
What to look for when investing in a property?
Yields, capital gains, infrastructure, and making sure the property you invest in helps you actually achieve your goals. Check out what plans are under development in that region or area for the next 10-15 years, as this will give you a good indication on the growth of the region.
Some people might not be focused on the property and making money off it, some people just want a nice bach to go to during the summer breaks. Some people are looking to buy and hold, or others are looking for one they can do up and flip quickly.
If you are looking at making money, you’ll want to make sure you’re aiming for about 3%-4%+ yields. But, you also have to price it right. If you overprice your investment property, the likelihood is that room-hunters or flat-hunters will go for a cheaper option.
Property Empire: The Experts In Property Management.
Property Empire have been the experts at providing advice for tenants and landlords, making sure everything is up to code and you get the right tenants. If you are looking at an investment property in New Zealand / Aotearoa, make sure you reach out to the team and ensure you’re getting the best bang for your buck.
A checklist for when you’re looking to invest in property:
- Location: You want renters who are able to pay on time and keep the house in good condition, so check if the house is somewhere that will allow you to get the best type of tenant. Are there benefits, perhaps by a train station, close to schools, or has a great sense of community? Are you looking for an all-year property, or will it be seasonal?
- Development: What are the future developments in that area? In that region? In that city? What is being supported by local governments and national governments? Is there something with the land you could look at? What is being done to further where you’re buying?
- Infrastructure: What is being funded to support the growth of the area you’re buying in? How far does a potential tenant need to travel to get to where they need to go? How good is the public transport system or schools in that area?
If you’re investing in property in New Zealand from overseas, give this article a read. While we don’t have a crystal ball, we have a fairly good handle on what’s good and where. Reach out to one of the team of expert financial advisers to make sure you can achieve your goals, or get in touch with property managers over at Property Empire.
