House prices rocketed up in February, with Auckland hitting a record median high of $1,100,000. However, March is likely to be close to the peak for the time being – we always see a drop-off in activity during autumn and winter.
This will be exacerbated by the reintroduction of LVRs for investors, which the RBNZ is considering making permanent.
The overall economy is showing mixed signs, with retail spending and confidence down, but employment looking positive. Businesses, particularly in Auckland, are feeling cautious after the latest lockdown. Some economists are also predicting that interest rates have bottomed out. Of course, commentators have been incorrectly predicting interest rate rises for 10 years, because forecasting is extremely difficult. That’s why you need a financial plan with a little flexibility since we never quite know what’s around the corner!
The new rental standards continue to cause stress for landlords, and with house prices and compliance costs so high you might wonder why anyone would get caught up in the madness. But it remains a case of ‘Where else are you going to put your money?’. Property and shares have performed extremely well over the past year, while more conservative options have been unimpressive; interest on savings is negligible and bonds are plodding. While rental properties remain a risky business, they have also been an outstanding investment and continue to be a solid choice for everyday Kiwis.
If you are interested in getting started with your first rental property, or you’re hoping to expand your portfolio, we’d love to hear from you.