Skyrocketing Rents

Posted by lindsay on January 13, 2014

Those keen on property investment in New Zealand need to consider the prospect of tenancy. The most obvious cities in which to invest would be the ones with the greatest populations; Auckland, Wellington and Christchurch. Investors are more likely to attract a greater number of potential tenants, and wages earned tend to be higher in these areas. 

Interesting to note though, is the imbalance between wages and rental prices. A recent article in the NZ Herald shared that prices are rising exceptionally quicker than wages. Over the last four years, the median rental for a three bedroom in Auckland, for example, has gone up 15 per cent. In contrast, inflation only rose 8.7%, and wages 9.7%, according to the Reserve Bank of New Zealand. Add to this that New Zealand's median wage was reported at $560 and investors are left to consider future investment opportunities. 

Price points need to be in conjunction not only with what one is willing to pay, but also what one can afford. Consider the amount that would be spent on the home and balance that with repayments and possible ROI. Also look at the state of the market and debate how much higher it can go before prices start to decline. Is New Zealand at its peak? If so, how will this affect an investment in the long term? 

Don’t forget the adage, some of the best things in life are often built from the ground up.