Why invest in property now

By Scott Bentley

Why invest in property now

The beginning of August saw the Reserve Bank of New Zealand drop the Official Cash Rate (OCR) to 1 percent. On 25 September, it held at that rate but the commentators are saying another cut could be in the offing. If you rely on bank term deposits for your income, this is not good news.

Effectively after taking into account tax on any interest you earn plus bank fees, it’s costing you to keep your money in the bank. Savvy investors know it’s best to spread investments, but with a volatile sharemarket and poor bank returns, there is one investment that continues to shine, and that’s real estate.
Reasons to invest in property include:
- Our growing population. Immigration has seen New Zealand’s population soar, and while the Government wants to limit immigration, we still need to import labour to fill our skills gaps. Marlborough is now classified as a medium growth area. It’s expected that an extra 3,060 seasonal workers will be needed by next year. This has and will continue to have a very positive effect on the property market.
- The record low interest rates allow investors to enter or expand on their property investments more easily. This combines with the high demand for rental properties to make real estate a highly attractive option.
- As with any investment the real estate market fluctuates, and if you’ve done your sums, have allowed for interest rate increases and a variable market, then property is a sound, mid- to long-term investment. The current trend sees property prices still moving up and likely to continue to do so for the medium term.
- The Government’s changes to the loan-to-value ratio means you now need only 30 percent (or more) deposit for a rental property, which is 5 percent less than previously required.
- New Zealand continues to see a shortage of houses and demand for both rentals and new builds is high.
Whether you take up the option of investing in existing housing for rentals, or decide to go for building a new home, the opportunity is there to make a good return on your investment for the medium to long term.
And, whether you are looking to buy or sell in a period of increased or limited supply and/or demand, remember that property investment continues to prove itself as a sound investment because land is a finite resource.

Call First National Marlborough for more guidance in choosing the right investment property for you in today’s market.

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