RBNZ decision, REINZ data push investors to act

With the Reserve Bank of New Zealand's (RBNZ) decision to raise the official cash rate yet again during June, prospective home buyers may be wondering how such a move could affect their residential investment property goals.

The RBNZ raised the cash rate 25 basis points to 3.25 per cent on June 12. In his statement regarding the decision, RBNZ Governor Graeme Wheeler touched on the nation's real estate market.

"While house price inflation remains high, the housing market has moderated since late last year when restrictions were applied to high loan-to-value ratio mortgage lending and when mortgage interest rates began rising," Mr Wheeler said.

And with the cash rate lifted yet again, home loan borrowers can most likely count on interest rates following suit.

So the question is: Is it still worth it to invest in property in Auckland, Hamilton and other areas throughout the country?

According to data released by the Real Estate Institute of New Zealand (REINZ), opportunities still exist.

Data from the organisation shows that sales were on the rise during May, up 15.9 per cent from April. Meanwhile, the national median price had risen by $38,000 from May 2013, reaching $430,000.

For buyers considering property investment in Auckland, the news is even better.

"While the growth in the national median price is almost 10 per cent compared to May 2013, the driving force for this increase are the Auckland and Canterbury/Westland regions," said REINZ Chief Executive Helen O'Sullivan in a June 16 media release.

"Together these two regions represent almost 53 per cent of all sales, but contributed 76 per cent of the uplift in the median price."

In short, both sales and prices are making gains in Auckland. This means investors can likely count on high demand and an asset that will potentially improve in value after they buy it.

Furthermore, it's a safe bet that the official cash rate will rise again in the future, meaning the interest rates of today might not be available tomorrow.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert