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Is The Side Turning?

After a short period of buyer uncertainty, we are seeing early signs that the tide is turning, writes Debbie Roberts.

By: Debbie Roberts

1 August 2021

Let’s face it, demand never actually went away, it just took a brief holiday while everyone tried to wrap their heads around recent changes.

It is human nature that when there is uncertainty, especially in the property market, people tend to sit on the sidelines waiting to see what happens. However, people still want to own their own home, people will always want to improve their financial position for retirement, and property investment is still the preferred investment of choice for the majority of New Zealanders. It seems the general public has decided that they have had enough of waiting, and they want to get back into the game even if they don’t yet fully know or understand the new rules.

With interest rates starting to rise, we appear to be seeing the early stages of FOMO coming back into the property market. We are once again starting to hear a lot of, “If we don’t buy something soon, we’ll never be able to afford to buy anything.” That’s not true though. You just need a good plan, and realistic expectations.

So, if there is going to be another resurgence in the housing market from people who are afraid they are going to miss out if they don’t jump on this bandwagon ASAP, how can you ensure that you don’t pay too much for a property?

Ten Ways To Avoid Overpaying

1. Get a pre-approval for lending before you start your search so you know how much you can borrow.

2. Have a plan. Remove as much emotion from the purchase process as possible.
'Try not to “fall in love” with a property. If it’s an investment property, fall in love with the numbers instead. '

3. Do your research. Find out what similar properties in the area have sold for recently, and how they compare to the property you are looking at. Find out what market rent is in the area, and if there is demand for the type of property you are interested in.

4. Crunch the numbers. Make sure you can afford the mortgage payments when interest rates increase, or if you have a period of vacancy between tenants.

5. If it’s an investment property, do you have to make any changes to comply with Healthy Home standards? How does the after tax cash flow look? Have you factored that into your budget? How will the after tax cash flow look when interest rates increase? Are you purchasing the property into an appropriate structure for asset protection and tax purposes?

6. What are you wanting to achieve from your investment? Is this property going to help you reach your goals, or will it stop you from progressing further? If you don’t know the answer to these questions, you might be making a decision based on emotion rather than on facts.

7. Do thorough due diligence prior to going unconditional. Failure to do this can result in lessons learned the hard way.

8. Treat property investment like a business, not a hobby. Understand that buying an investment property is completely different to buying a home.

9. Be patient. There is a saying that “The deal of the century comes around about once a week,” so don’t let yourself get pressured into buying anything, or paying too much.

10. Invest in your knowledge before you invest in property. The more you know about property investing, the less likely you are to make a significant financial mistake.

Approximately 78% of investors in NZ own ONE rental property. These mum and dad investors are “average Kiwis”, not high income earners. With the right kind of help, you might even find that you can purchase more than one investment property, which can reduce your risk if you know what you are doing, and make your financial future even brighter. The best part is, even if you don’t know what you are doing, it is easy to learn.

Property Apprentice is 100% NZ owned and operated, and is NZ’s leading property and real estate investment coaching program. With their lifetime coaching support program, and no vested financial interest in any property you purchase, they are there to help you to reach your property investment goals.

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