Warning for home buyers

Quotable Valuations central region manager Blue Hancock said rents had not kept pace with rising property values, and those who had borrowed money to invest in property could find their rental income was not enough to match their mortgage repayments.

While the value of homes had risen 46 percent in Tasman between December 2002 and December 2003, rents for three-bedroom houses in Richmond had increased only 6.5 percent in the same period.

A profit would only be made when the property was sold, and if capital values fell, this could leave some investors out of pocket, Mr Hancock said.

The rise in property values in the Nelson region had slowed to just 1 percent between December 2003 and March 2004, he said. In the same quarter, the average rent for a three-bedroom home in Richmond had actually dropped from $277 to $269.

Nelson Real Estate Institute spokesman Perry Hoby said there were many first-time investors who had hoped to profit from the housing boom.

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