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Prepare For Change

Quieter, less extreme times are the real name of the property game at the moment. It means investors have a chance to reflect on their next move and get ready for the new environment.

By: Miriam Bell

1 August 2019

There’s no escaping it: New Zealanders have a deep and abiding fascination with property investment. They like to talk about it and they like to gather information about it.

No matter what the occasion or forum – dinner party or school pick up or bus stop encounter – as soon as I mention what I do, I’m swamped by opinions and, more often, questions about the property market. I guess it’s similar to the way doctors are always asked for personal health advice when they tell people their profession.

But here’s the thing: these conversations are very rarely hostile. Even when people have strong feelings about a controversial issue, like the capital gains tax proposal, it’s rare that I’m treated to the type of high octane, aggressive comments that property investment regularly receives online.

To me, this highlights how the online world provokes and relies on extreme views and commentary to grab, and hold users’ attention. That’s why there are endless “price crash”, then “boom” stories on the property market. And why evil landlord stories dominate commentary on the rental market.

It’s simply because they are more dramatic and sensational than the reality.

When it comes to the property market, for example, there’s recently been another round of “crash” speculation following some well-publicised suggestions from overseas experts. Yet the relevant data suggests the market is trucking along in an orderly, rather flat fashion.

There’s no fireworks at play. Instead we have slowing price growth, calm (following the demise of a capital gains tax), and a lull in the Government’s housing policy programme – partially due to the changing of the ministerial guard in this area.

The reality is that it’s quiet, rather than turbulent, in the property world. It doesn’t make for great fodder for public outrage. But what do these quieter, calmer times mean for investors?

They represent the changing investment environment, one which will require a different focus for many investors. And they offer investors the opportunity to re-think, re-strategise and do some professional development in a less pressurised space.

To that end, this issue’s offerings may help. One change occurring is the shift in focus from capital gains to cash flow and returns. So this month’s lead takes a look at New Zealand’s top 20 high yield suburbs. Even if readers don’t want to make the leap into the suburbs listed, it should leave them with plenty to think about.

We also talk to Palmerston North investor Shane Storey who specialises in student flats. His property journey has been a roller coaster ride. But it’s one he has learnt many useful lessons from, including how to adapt to changing times. And we take an in-depth look at Trusts, their pros and cons for investors, and how the law around them too is changing.

Happy reading – and may it assist you to be prepared for the next stage of the cycle.

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