Timing and strategy in Auckland market?

Question from Livia updated on 23rd September 2013:

We are contemplating buying an investment property and would like to get some advice from you. First is around timing, we are not sure whether this is the right time as house prices are said to be over valued? The next questions is around strategy, our strategy is to rent out the house and use the rent to pay off the mortgage. We're looking at houses with prices around $450,000 that ideally can generate rent around $600 per week. The next is location. We are thinking of South Auckland, where house price and potential rent are within our expectation. But we are concerned that we may not have a good capital gain in the future. Thanks in advance for your advice.

Our expert Kris Pedersen responded:

Hi Livia, with the expected population growth in South Auckland I think it is fair to say that it should experience roughly the same capital growth as the rest of Auckland across the property cycle (note that different parts of Auckland move at different times). In regards to if it is the right time, I'd firstly state that most economists are sill predicting rises on the back of the supply shortages and increasing migration numbers. Secondly you need to think about why you are investing as if it is a long-term plan then getting in now as long as you stick to your buying rules is as good as any. With the recent LVR changes from the RBNZ this may temporarily remove some first home buyers from the market (I expect a lot will come back with the influx of more non-bank options over the next 12 to 18 months) so with less competition for a period there may be an increased chance to find some good buys. Regards Kris Pedersen

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz

Search the Ask an Expert archive

Browse all questions in the Ask An Expert Archive »

Site by PHP Developer