24-Jul-2017 Mark Honeybone



      Mark addresses the question on every investor’s lips.

      The media is all over the place at the moment. The day I am writing this article, Barfoot figures in Auckland show drops in ‘sale prices’ and increases in ‘days to sell’ in many areas around Auckland and state that the medium price is the same as 12 months ago. Of course the Herald has jumped on the bandwagon saying that Auckland is again behind the rest of the country.

      This last statement is probably correct, it happens about once every ten years, and when that happens it is time to be very careful and cautious when purchasing.

      As far as the Auckland market being the same as 12 months ago, the National Party will be pleased as that's what they have been trying to achieve for a few years. In my opinion the two main drivers have been the very difficult lending
      rules put on by the banks, and of course something dear to all our investment hearts, the Loan to Value Ratio (LVR) of 40% that come in just on a year ago. That along with normal slower winter sales but more to the point the upcoming election all puts pressure on the market.

      A year ago as soon as the new LVR (40% deposit required for investors) rules were announced I said watch out for high investor areas around Auckland in particular and other parts of the country, some of these areas will drop. We certainly saw this within my own business in Hamilton where Auckland investors almost overnight stopped buying investment properties there.

      Overnight an investor required a $200,000 deposit for a $500,000 purchase, instead of just $100,000.

      In Auckland it has been worse where investors buying say, a three- bedroom home and minor dwelling in a Manurewa or Papatoetoe location for $800,000, now requires about $320,000 deposit. As it happens these areas have had price drops, along with areas in West Auckland, another high rental area of Auckland.




      "The safest way to buy is too develop or manufacture your own equity
      in a property purchase"


      Other areas in Auckland seemed to remain fairly strong, good areas in good locations with quality houses. We just sold an investment property for asking price in Sandringham for over $2 million. 

      As stated other areas of New Zealand have had great growth although many areas are starting to slow. This is normal for this time of the market, just be careful of what happens in these areas in the next step of the Property Cycle where generally they do have larger falls and minimal growth than the main cities like Auckland.


      • Cheaper areas of the country, that's if there is a good story behind the area, or strong growth and infrastructure.

      • Good areas and homes that aren’t too unusual, are still selling well.

      • New builds are great as 20% deposit opportunities still exist; check with your broker or email me first. We have some outstanding opportunities to take advantage of, anywhere from $400,000 - $900,000, that's only $80,000 - $180,000 deposit.

      • Wait for a few years when property is maybe cheaper; there is however a
        risk of missing out on some outstanding opportunities that are coming up now.

      • Certain areas of Christchurch and Wellington still seem reasonably
        good and are popular areas. In fact Christchurch I see is one of the biggest opportunities in the country right now (a story for another time).

      • The safest way to buy is to develop or manufacture your own equity in a property purchase. Back to Property 101, renovate, add a room, subdivide; if in Auckland use the Unitary Plan to your advantage. 



      Of course you still want to buy well. Again, this is a topic in itself for another day, do your figures well before you start, allow for a market shift. Talk to an expert or someone that has done it before.