Looking to invest? Jump in while it’s affordable!
Property investment is all about playing the long game, but recent data makes it clear people considering residential investment property in Auckland might be better served entering the market sooner rather than later.
First, the Reserve Bank of New Zealand's (RBNZ) decision to raise the official cash rate on April 24 marked the second consecutive increase from the financial institution. With the cash rate rising 25 basis points to reach 3 per cent, it means that low interest rates have gotten that much higher.
RBNZ Governor Graeme Wheeler said the increase was necessary in order to keep future average inflation near the 2 per cent target. In short, the bank could raise the cash rate even higher in the coming months in order to reach its goals, making the chance of obtaining an investment mortgage with low interest rates harder.
Secondly, in a development sure to please property investors already in the market, median price growth for dwellings in New Zealand reached a new record high during March.
The Real Estate Institute of New Zealand (REINZ) reported on April 11 that the national median price reached $440,000 during this time period, an increase of $44,000 from March 2013 and $25,000 from February.
Property investors seeking capital growth in Auckland have even more to smile about, as the new high median for the city was $637,000 during March.
"The results for March further define the divide between the drivers of the current residential market – Canterbury and Auckland – and the rest of the country," said REINZ Chief Executive Helen O'Sullivan.
"There appears to be an increasing divergence between the regions that are seeing growth in their property markets, such as Auckland, Canterbury and Waikato/Bay of Plenty and regions where the property market is far more subdued, such as Wellington, Hawkes Bay, Manawatu/Wanganui and Otago and Southland."
Property cycles are measured in years, not months. However, with interest rates and house prices both rising, now may be the ideal time to enter the market in order to obtain a more affordable investment.