Investing in Auckland
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Articles by Salesh Chand
While some people are still concerned about the property market and are cautious about investing, it is my opinion that now is a great time to invest in Auckland. Why do I say that? For a number of reasons, which I outline below.
1. Low interest rates
Interest rates are at record lows, and chances are they will stay that way for some time. This makes it easier for investors to fund their borrowing, and helps to produce higher rental yields.
2. The market is stable
Over the last 12 months or so, we have seen price decreases in some suburbs of Auckland, but the market now appears to be stable/flat. There are still discounted deals available, particularly from vendors who are under financial stress. Due to Auckland’s growing population, high employment, higher wages and supply-demand imbalance, I don’t see any major indicator causing further price reductions (unless we suffer a left-field global economic event).
3. Rents are increasing
Increasing rents means improved cash flow for Auckland investors, so buy-to-hold yields are starting to look better.
4. Shortage of rental properties
Due to a significant shortage of rental accommodation in Auckland, rental properties are in very high demand. This means you are able to get good rent and have no shortage of good tenants.
To illustrate, I recently had to give tenants in one of my properties 90 days’ notice. I believed this would give them plenty of time to find alternative accommodation. On the day they were due to move out, I went to the property to say goodbye. Everything was packed up in the car, and I asked where they were moving to. Their answer? “We don’t know. We have been looking for somewhere for the last three months. Every open home we go to, we see the same families who are in the same situation as us.”
This was very hard for me to hear, and illustrates the desperate need Auckland has for good rental properties.
Summary
All of the above leads to the potential for positive cash flow and great investing in Auckland. Clearly, you still need to choose the right sort of property in the right areas, and adopt the best strategy. For example, houses of multiple occupancy (HMOs) and rent by the room can be excellent ways to increase the yield properties produce. You can learn about these and other property investing strategies at our property seminars and courses.
Due to a significant shortage of rental accommodation in Auckland, rental properties are in very high demand. This means you are able to get good rent and have no shortage of good tenants.
To illustrate, I recently had to give tenants in one of my properties 90 days’ notice. I believed this would give them plenty of time to find alternative accommodation. On the day they were due to move out, I went to the property to say goodbye. Everything was packed up in the car, and I asked where they were moving to. Their answer? “We don’t know. We have been looking for somewhere for the last three months. Every open home we go to, we see the same families who are in the same situation as us.”
This was very hard for me to hear, and illustrates the desperate need Auckland has for good rental properties.
Summary
All of the above leads to the potential for positive cash flow and great investing in Auckland. Clearly, you still need to choose the right sort of property in the right areas, and adopt the best strategy. For example, houses of multiple occupancy (HMOs) and rent by the room can be excellent ways to increase the yield properties produce. You can learn about these and other property investing strategies at our property seminars and courses.
Salesh Chand
Director of Business Services
© Gilligan Rowe & Associates LP
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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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- Pete B, June 2024
Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.
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