Everyone loves to win. Anyone who's thought about investment property in Auckland will be no different, and will want any kind of edge they can get. Aside from getting sound advice from financial experts, it comes down to understanding what's happening in the real estate market and how it ticks.

But the latter is something that can be more difficult than trying to explain why Kiwis love throwing about an egg-shaped ball, to someone who's never seen a game of rugby.

That's why we're here to help. Let's take a look at the main influencing factors that should matter to you as a property investor.

Cash rate

The official cash rate is a figure that the Reserve Bank of New Zealand (RBNZ) sets eight times a year. While there are exceptions, market interest rates will generally rise and fall in step with it.

The RBNZ decided to leave the cash rate unchanged at 2.75 per cent.

This will go on to influence all monetary activity in the country in some way; whether it's picking up a bag of fish and chips, buying a new car or saving money with your Kiwisaver.

On October 29, the RBNZ decided to leave the cash rate unchanged at 2.75 per cent. This is the lowest it has been since March last year, which has certainly allowed mortgage rates to remain low. This was to stimulate growth in the economy, as when interest rates are low, people have more motivation to spend and borrow, rather than save. Furthermore, the official statement from the Reserve Bank said that "some further reduction in the OCR seems likely," showing that this figure could very well go lower.

As someone after a piece of the investment property pie, it could soon represent a great time to enter the market with the potential for interest rates to take a further dip.

Keeping an eye on cash rate decisions can bring light to property trends.Keeping an eye on cash rate decisions can bring light to property trends.

Gains and yields

When it comes to choosing a property investment, you'll obviously want to pick one that will give you the greatest return on your dollar. But this can be a difficult affair – unless you know how to keep an eye out for attractive capital gains and rental yields.

Capital gains occur when the value of your property increases over time, and rental yield describes how much rent a home gains in comparison to its purchase price on the market.

Small investors are actually the ones dominating the investment property market.

Take a peek at QV figures for Auckland's market. In Auckland, the average value of homes in the Papakura and Waitakere districts have grown the most, recording respective value increases of 33.9 and 27.7 per cent in October. It pays to always keep an eye out on which areas are recording the most value increases, and not just locations that are trendy or conveniently familiar to you.

But capital gains shouldn't be the only form of return you should depend on. Rental yield is something to also consider, and is a great way to see just how much constant return you'll get for your dollar. QV has revealed that central western and eastern suburbs saw the greatest rental yields in October, potentially making these areas golden investment opportunities.

Anyone advising you on how to build wealth will tell you that most of the time, property investment is a marathon and not a sprint. So even if you've bought real estate in a suburb that isn't leading the way in growth now, it doesn't necessarily mean you won't see great returns on your investment in the long haul.

While there are still numerous factors to take into account, don't feel like you're alone! An October 28 article by Westpac reported that small investors are actually the ones dominating the investment property market. So just take it one step at a time with Goodlife Financial Advice at your side.

Here's to your financial independence!

Daniel Carney
Authorised Financial Adviser / Investment Property Expert

Contact us now!

0508 GOODLIFE
info@goodlifeadvice.co.nz

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