Caution restrains bargain hunting

Friday 15 January 2010

With a few grey clouds on the horizon, caution prevails for many property investors around the country.

By Vicki Holder

Government legislation around tax issues and the prospect of rising interest rates are having an impact on buyers, says president of the Otago Property Investors' Association, Cliff Seque.

"The banks are saying we'll probably be paying two or three percent more by Christmas. To me, prices are still a bit high."

But Seque knows several Dunedin association members out there looking for properties with potential. "A friend recently bought three flats that were underlet and he's planning to do them up to increase the rents. That's the kind of thing they're after."

In Christchurch, real estate agent Tony McPherson of Ray White McPherson Group agrees there's been a lot of talk about tax changes, "so we may expect a bit of reticence".

But despite QV reporting nationwide prices for 2009 are just 4.9% below the late 2007 peak, he says there's good enquiry levels and "quite a bit of movement at the lower end" from investors.

He says high prices are not across the board in Christchurch and he still believes they'll go up rather than down.

Auckland central city apartment investor Paul Reid says there aren't so many people desperate to sell at rock bottom right now, but there are still bargains to be found. And he's busy hunting.

"Yesterday, I bought a 30m2, one-bedroom apartment with carpark at Citta on the corner of Symonds St and Khyber pass for $142,000 off Trademe. I've already bought and sold there so I know they're OK. Once it's furnished, I'll get $310 a week, generating a 9% net return."

In Te Awamutu, where rental properties remain in strong demand, property investor and property manager Jodie Morgan confirms values are definitely still down.

"It's not a good time to be selling here, so personally I think it's a great time to buy. It's not hard to find properties generating 8% to 9% yields but you have to have your eye on the market. They're generally units and properties with two dwellings." 

Comments from our readers

No comments yet

Add your comment:

House Prices

Buyers cautious as activity remains subdued

House prices extended their decline for a fifth month as a backlog of unsold property sits on the market.

Commercial

Review may give investors some depreciation relief

Commercial and industrial property investors should still be able to claim significant depreciation allowances, an asset depreciation expert says.

Mortgages

Economist pushes out dates for next OCR hikes

One economist has pushed out the date for the Reserve Bank’s next official cash rate hike citing recent downgrades to its forecasts for global GDP growth, including in Australia and New Zealand.