The returns on residential investment property remained poor in the third quarter of this year (Q3), although the decline in mortgage interest rates improved investors' cash flows, according to interest.co.nz latest residential rental yield and cash flow calculations.
Interest.co.nz tracks quarterly changes in the the Real Estate Institute of NZ's lower quartile selling prices and rental bond data. This is to calculate indicative gross rental yields for three bedroom houses and one and two bedroom units/apartments, in all of the main urban areas around the country.
We also use the above data to calculate how much of the rental income from those properties would be left over after the mortgage was paid, assuming the mortgage was for 60% of the lower quartile price and over a 20 year term.
As usual, there were significant variations by property type and location.
Three bedroom houses are generally a poor investment
For three bedroom houses there was very little movement in either the lower quartile price or the median rent at the national level between Q2 and Q3.
The national lower quartile price for three bedroom houses declined marginally from $585,000 in Q2 to $580,000 in Q3, while the median rent for the same was unchanged at $650 a week, which meant the gross rental yield was also unchanged at 5.8%.
The only meaningful change was in the mortgage interest rates used in the calculations, which declined from 6.5% in Q2 to to 5.68% in Q3.
That substantially increased the cash surplus left over once the mortgage was paid, from $47 a week in Q2 to $133 a week in Q3.
Although that appears to be a significant improvement, it's still a very poor return, because the landlord would still have to pay expenses such as rates, insurance and maintenance from the surplus and also allow for periods of vacancy when there was no rental income.
The situation is even worse for three bedroom houses in high cost areas such as Auckland, Tauranga and Queenstown, where the gross rental yields remained below 5% in Q2 and cashflows were still strongly negative, although the outflow of cash has been reduced form Q2. See the first table below for the indicative yield and cash flow figures in all main urban districts.
Essentially what these figures show is that three bedroom houses are mainly a poor investment from a cash flow perspective and investors buying at Q3 metrics would be heavily reliant on future capital gains to eventually make some meaningful money.
Rents and selling prices of two bedroom units both in decline.
There were small declines in both the REINZ's national lower quartile price and the median rent for multi-unit properties with two bedrooms in Q3 this year.
The lower quartile price dropped from $427,875 in Q2 to $420,000 in Q3, while the median rent for these properties declined form $600 a week to $590.
However one balanced out the other in the yield calculation which remained unchanged at 7.3%.
The bright spot for the two bedroom units was the decline in mortgage rates, which pushed the post-mortgage cash surplus up from $159 a week to $184. That's the highest cash flow of the three property types monitored in this series, suggesting they may be occupying something of a sweet spot in the market for investors at the moment.
One bedroom units/apartments show big price gains - lower yields.
There was a substantial increase in the REINZ's national lower quartile price of multi-unit properties with one bedroom, which rose from $215,000 in Q2 to $269,500 in Q3 (+25%), while the national median rent for these types of properties declined slightly from $460 a week to $450.
That pushed their indicative gross yield down from 11.1% to 8.7%.
The higher median price also pushed down the indictive post-mortgage cash surplus, from $238 a week in Q2 to $150 a week in Q3, even after allowing for the decline in mortgage interest rates.
One bedroom units have traditionally provided the best rental returns for investors so are less reliant on capital gains. Although in certain markets, such as central Auckland, overseas students make up a large proportion of their tenants, which can make the returns subject to high levels of vacancy from time to time, meaning their returns can be volatile.
In particular, this shows up in the one bedroom table below for those properties in Auckland's Waitemata & Gulf Ward, which provides staggering indicative yields of 19.5% and post-mortgage cash of $334 a week.
That's nice money if you can get it, but of course if something seems too good to be true then it probably is, and those figures are no different.
One of the main reasons the one bedroom apartments in this part of Auckland provided such apparently fabulous returns is that large numbers of them are on leasehold titles, which means they can sell for very low prices.
Although that provides a high gross return, much of that cream will be siphoned off by ground rent payments, which along with allowances for vacancies, will bring net returns back to more realistic levels.
This can be a trap for inexperienced investors who are unfamiliar with the ins and outs of this particular niche market.
The comment stream on this story is now closed.
| Indicative Rental Returns for a Three Bedroom House | ||||
| Indicative Gross Rental Yield | Indicative weekly gross surplus/deficit after mortgage paid | |||
| District | Q2 2024 | Q3 2024 | Q2 2024 | Q3 2024 |
| Whangarei District | 5.8% | 5.9% | $45 | $610 |
| Auckland Region: | 4.6% | 4.6% | -$128 | -$68 |
| Rodney Ward | 3.8% | 4.0% | -$265 | -$162 |
| Albany Ward | 4.2% | 4.3% | -$201 | -$129 |
| North Shore Ward | 4.1% | 4.1% | -$231 | -$160 |
| Waitakere Ward | 4.5% | 4.5% | -$124 | -$81 |
| Waitemata and Gulf Ward | 3.4% | 3.3% | -$553 | -$488 |
| Whau Ward | 4.2% | 4.2% | -$187 | -$126 |
| Albert-Eden-Puketapapa Ward | 3.6% | 4.0% | -$385 | -$192 |
| Orakei Ward | 3.4% | 3.6% | -$491 | -$338 |
| Maungakiekie-Tamaki Ward | 4.0% | 4.1% | -$266 | -$172 |
| Howick Ward | 3.8% | 3.9% | -$312 | -$197 |
| Manukau Ward | 5.1% | 4.8% | -$42 | -$29 |
| Manurewa-Papakura Ward | 5.2% | 5.1% | -$27 | $4 |
| Franklin Ward | 4.7% | 4.7% | -$97 | -$48 |
| Hamilton City | 5.2% | 5.1% | -$25 | $11 |
| Tauranga City | 5.0% | 4.9% | -$46 | -$14 |
| Rotorua District | 6.0% | 6.6% | $60 | $147 |
| Whakatane District | 5.4% | 5.3% | $2 | $31 |
| Taupo District | 5.4% | 5.3% | $5 | $33 |
| Napier City | 5.6% | 5.4% | $33 | $52 |
| Hastings District | 5.9% | 6.7% | $58 | $162 |
| New Plymouth District | 5,9% | 5.8% | $57 | $84 |
| Whanganui District | 6.4% | 6.7% | $82 | $135 |
| Palmerston North City | 5.7% | 6.1% | $40 | $103 |
| Kapiti Coast District | 5.4% | 5.2% | $0 | $22 |
| Porirua City | n/a | 5.7% | n/a | $81 |
| Upper Hutt City | 5.7% | 5.5% | $41 | $55 |
| Lower Hutt City | 5.8% | 6.1% | $54 | $120 |
| Wellington City | 4.9% | 5.0% | -$76 | $0 |
| Nelson City | 5.3% | 5.1% | -$9 | $15 |
| Marlborough District | 5.5% | 5.5% | $10 | $49 |
| Waimakariri District | 4.9% | 5.1% | -$54 | $11 |
| Christchurch City | 5.3% | 5.3% | -$9 | $35 |
| Selwyn District | 4.8% | 4.8% | -$68 | -$34 |
| Ashburton District | 5.7% | 6.0% | $26 | $80 |
| Timaru District | 5.6% | 5.8% | $18 | $65 |
| Queenstown-Lakes District | 3.8% | 4.2% | -$354 | -$182 |
| Dunedin City | 6.1% | 5.9% | $74 | $88 |
| Invercargill City | 6.8% | 6.8% | $103 | $133 |
| All of Aotearoa | 5.8% | 5.8% | $47 | $90 |
| Indicative Rental Returns for a Two Bedroom Unit/Apartment | ||||
| Indicative Gross Rental Yield | Indicative weekly gross surplus/deficit after mortgage paid | |||
| District | Q2 2024 | Q3 2024 | Q2 2024 | Q3 2024 |
| Whangarei District | 6.3% | 6.2% | $70 | $91 |
| Auckland Region: | 5.7% | 5.8% | $37 | $82 |
| Rodney Ward | 5.5% | $51 | ||
| Albany Ward | 4.7% | 4.4% | -$84 | -$86 |
| North Shore Ward | 4.5% | 4.4% | -$129 | -$82 |
| Waitakere Ward | 4.9% | 5.7% | -$52 | $66 |
| Waitemata & Gulf Ward | 22.1% | 18.9% | $470 | $441 |
| Whau Ward | 5.2% | 5.2% | -$13 | $17 |
| Albert-Eden-Puketapapa Ward | 5.2% | 5.2% | -$17 | $28 |
| Orakei Ward | 4.4% | 4.6% | -$139 | -$68 |
| Maungakiekie-Tamaki Ward | 5.6% | 5.9% | $32 | $94 |
| Howick Ward | 5.0% | 5.1% | $56 | $7 |
| Manukau Ward | 5.9% | 6.2% | $56 | $117 |
| Manurewa-Papakura Ward | 5.5% | 5.0% | $13 | $1 |
| Franklin Ward | 6.3% | $117 | ||
| Hamilton City | 5.1% | 6.0% | -$24 | $90 |
| Taupo District | ||||
| Tauranga City | 5.8% | 6.1% | $52 | $109 |
| Rotorua District | 7.5% | 6.3% | $156 | $99 |
| Whakatane District | 5.0% | -$32 | ||
| Hastings District | 5.8% | $38 | ||
| Napier City | 8.6% | 7.1% | $218 | $173 |
| New Plymouth District | 6.0% | 7.3% | $49 | $163 |
| Whanganui District | 7.5% | $147 | ||
| Palmerston North City | 6.6% | $108 | ||
| Kapiti Coast District | 5.2% | 6.1% | -$25 | $112 |
| Porirua City | 7.4% | 5.9% | $195 | $88 |
| Upper Hutt City | 5.6% | $19 | ||
| Lower Hutt City | 6.6% | 6.6% | $115 | $144 |
| Wellington City | 6.8% | 6.6% | $132 | $148 |
| Nelson City | 5.7% | 5.7% | $26 | $55 |
| Marlborough District | 6.3% | $96 | ||
| Waimakariri District | ||||
| Christchurch City | 6.4% | 6.3% | $87 | $103 |
| Selwyn District | ||||
| Ashburton District | ||||
| Timaru District | 5.2% | 6.4% | -$10 | $83 |
| Queenstown-Lakes District | 6.4% | 5.4% | $121 | $52 |
| Dunedin City | 7.4% | 6.8% | $131 | $128 |
| Invercargill City | 8.6% | 8.9% | $152 | $168 |
| All of Aotearoa | 7.3% | 7.3% | $159 | $184 |
| Indicative Gross Rental Returns for a One Bedroom Unit/Apartment | ||||
| Indicative Gross Rental Yield | Gross weekly cash surplus/deficit after mortgage paid | |||
| District | Q2 2024 | Q3 2024 | Q2 2024 | Q3 2024 |
| Whangarei District | 8.2% | 6.2% | $137 | $75 |
| Auckland Region: | 15.4% | 9.9% | $313 | $232 |
| Rodney Ward | ||||
| Albany Ward | 5.1% | 4.9% | -$27 | -$11 |
| North Shore Ward | 5.40% | 5.8% | $7 | $65 |
| Waitakere Ward | ||||
| Waitemata and Gulf Ward | 24.8% | 19.5% | $376 | $334 |
| Whau Ward | 8.7% | 6.5% | $176 | $106 |
| Albert-Eden-Puketapapa Ward | 6.0% | 6.2% | $54 | $95 |
| Orakei Ward | 5.8% | 5.4% | $40 | $38 |
| Maungakiekie-Tamaki Ward | 6.1% | 6.1% | $62 | $108 |
| Howick Ward | 4.9% | 5.4% | -$47 | $36 |
| Manukau Ward | 5.9% | 6.7% | $40 | $107 |
| Manurewa-Papakura Ward | ||||
| Franklin Ward | ||||
| Hamilton City | ||||
| Tauranga City | 5.3% | 6.7% | -$9 | $116 |
| Whakatane District | ||||
| Rotorua District | ||||
| Taupo District | ||||
| Hastings District | 5.5% | $38 | ||
| Napier City | ||||
| New Plymouth District | 8.50% | 9.0% | $138 | $199 |
| Whanganui District | 7.60% | $103 | ||
| Palmerston North City | ||||
| Kapiti Coast District | ||||
| Porirua City | ||||
| Upper Hutt City | ||||
| Lower Hutt City | 8.4% | 6.4% | $170 | $92 |
| Wellington City | 7.80% | 8.2% | -$76 | $180 |
| Nelson City | 5.8% | 3.9% | $29 | -$120 |
| Marlborough District | 4.5% | -$31 | ||
| Waimakariri District | ||||
| Christchurch City | 7.8% | 5.8% | $134 | $55 |
| Selwyn District | ||||
| Ashburton District | ||||
| Timaru District | ||||
| Queenstown-Lakes District | 9.1% | 9.6% | $225 | $263 |
| Dunedin City | 6.5% | 6.5% | $71 | $92 |
| Invercargill City | ||||
| All of Aotearoa | 11.1% | 8.7% | $238 | $190 |
*This article was first published in our email for paying subscribers first thing Friday morning. See here for more details and how to subscribe.
68 Comments
"One bedroom units have traditionally provided the best rental returns for investors so are less reliant on capital gains"
I think that statement alone speaks volumes....
Yep. The focus is all on tax free capital gain "by accident", which is just more or less straight tax avoidance. This rule should be made easier to interpret and enforce. Something like "if the owner has accepted $1 of income on the property, at any point in its life, then gain on sale is taxed at the normal rate".
How many times have we heard on here that "property investment for the long term" yet the same people have (often unrealistic) expectations that gravitate towards capital gains as if they're bankable in the short term. I'd say that if the yield stacks up on a risk weighted basis when compared to less risker deposits, it's a positive cash flow experience and if being a Landlord is your thing, go for it. That narrows down the field!
CGT will solve this, I suspect our PM knows its coming and is off loading now.....
CGT. What a great incentive for the politicians and bankers to pump up house prices!
If it were the gain less inflation rate, then maybe. Otherwise its a huge motivation to inflate prices.
Surely CGT is not going to be retroactive though, right?
I imagine most of Luxon's gains have already been made, so gains from here onwards, even if they'll incur a CGT, aren't going to be too much of a deal breaker. Or am I wrong?
PM has already said no CGT ... better returns to be had elsewhere maybe ? Im thinking RE has affordability problems and even if theres a return to nominal interest rates and snowball growth values it likely is entering 'broken model' material that is a domain whereby only an elite % of Kiwis can participate. Unlike the rockstar era, prices for Insurance, materials /goods and services have markedly climbed . Less disposable income is about for the average consumer to throw around. The problem for RE is now making the bigger numbers on paper spit out a return that is not reliant on a CG . What sort of CG do folk imagine is possible buying in the present market place? ...the numbers rockstar has left us are bigger and even though there has been a % value decline, relative to wages/living costs theres a marked disconnect that previously was not present... Lastly, Is the recent OCR adjustment to encourage RE investment or is it an act of mercy designed to ease some of the heat the banks have on their loan books? ... Chasing CG's on 100k plus vs chasing CG's on 1000k plus ...bigger numbers but fewer players my 10 cents...lol
https://www.rnz.co.nz/news/political/532793/capital-gains-tax-a-timelin…
Over the past 13 years (i.e. since 2011) the average house price in NZ has increased by 130 percent. But wait, there's more ......
Home owners have avoided paying rent - while investors keep earning rental income.
That's property's track record - and the reason why we don't come across too many complaints from home owners/investors.
Amidst the plethora of investment vehicles available to us, property has earned itself a remarkably good long-term reputation. 🍒
TTP
US Shares
Surprisingly, the worst 22 year period for real returns was not in the aftermath of the Great Depression but rather in the 1970s. The two-plus decade real return ending in the summer of 1982 was just 1.4% per year. That time frame featured an annual inflation rate of nearly 6% which is a high hurdle rate to beat.
Yet we all know shares are great long term.
TTP - I have made a bundle on houses. I made 385% in 11 years on one.
But timing is very very important, one mans gain is often via another mans loss.
like 82% of Americans I think now is a bad time to buy.
Hi IT GUY,
Good contribution - but it's possible the 82% of Americans will turn out to be wrong.
Location has a lot to do with it. Well-located property tends to be a pretty good bet - especially when one buys with a long-term horizon.
Congratulations on your financial success with property. Good to hear! May the force remain with you!
TTP
I will tell you when I buy... when did you last buy an investment property?
Homeowners have avoided paying rent
Homeowners who bought with a mortgage, didn't realise they were renting to own from the bank.
And still no-one wants to admit the wider consequences of turning homes into investment vehicles.
The comment that "homeowners have avoided paying rent" misses several key and important factors:
1) most buyers use mortgage financing so the previous commenter was incomplete and potentially misleading in their response. The cost of interest over the life of the mortgage can be very large and even more than the total original mortgage loan - e.g. for a $500,000 mortgage, the interest alone could be over $500,000 based on a 30 year mortgage at an interest rate of 6.0% p.a.
2) all renters / tenants don't have to pay the costs of ownership - rates, insurance and maintenance. To omit this simple cost of ownership can lead to misinformed choices and decisions.
3) even if homeowners are mortgage free, there is still the opportunity cost of capital tied up in ownership of the residential dwelling.
Anyone who has done the above calculations considering the above can see when renting is better than ownership.
Each person should undertake their own calculations based on their own situation rather than rely on a blanket generic statement of opinion with no supporting evidence or calculation which could be extremely misleading and lead to a decision with an outcome that is undesirable. Remember the purchase of a residential dwelling for most buyers can be 500 - 1000% of a buyer's net worth and is likely to be the household's largest purchase.
CAVEAT EMPTOR. Beware of advice from those with potential undisclosed vested self serving interests.
I disagree (re it being avoidance) and, more importantly, so does IRD.
Let's focus on the long term aspect. This report says 3br properties are barely washing their face. But that is based on a whole bunch of assumptions about the cost at a certain point in time, an assumed level of debt and assumed financing costs. But none of those factors stand still. As interest rates decline, this article shows it changes the performance of the investment. However, it overlooks the return on equity also improves because the default alternative (interest on cash deposits) is also falling. This article is just a snapshot at a single point in time and even without any potential capital gain (which never figured into my expectations when I started), people like me can successfully ride out periods when returns are lower.
@Averageman - tax avoidance is illegal - the sun shines (or sets) for everyone with the same rules applying - if you think the capital gains are massive why dont you do it - i know you like to moan and do nothing - and that is wny you are an average man - you should try the investing you will be average and poor. oh and always moaning
safeashouses,
- :"tax avoidance is illegal"?. No it's not. Tax evasion is illegal and there is a vast difference between the two.
Tax free gains plus the "tax avoidance" of offsetting against taxable income. And then believing they should still be entitled to a bunch of taxpayer services.
The tax avoidance is only legal by virtue of a law that favours some over others.
It's like legalising pharmaceutical drugs but criminalising other drugs.
"The only meaningful change was in the mortgage interest rates used in the calculations, which declined from 6.5% in Q2 to to 5.68% in Q3."
Hi Greg, Just wondering ... Is that the right thing to do at this time? From the Monetary Policy Statement. November 2024 (see page 4) ... :
"The average rate on outstanding mortgages has now peaked at 6.4 percent and is expected to decline to 5.8 percent over the next 12 months as borrowers refix their mortgage interest rates at lower levels in line with a falling OCR."
Who in there right mind would leverage into a loss making NZ property investment where the S&P 500 is up
5,998.74+692.70 (13.05%)past 6 months
5,998.74+1,443.85 (31.70%)past year
leverage is easy to get in equities just use CFD or 1 year options. at any point in real time you could short e-minis to be hedged, vs the 6 month sale cycle of pooperty.
Loser (Beck) https://www.youtube.com/watch?v=YgSPaXgAdzE
Ask the PM, the best time to sell was Yesterday........
Easy, the bank will lend you $1 Million to buy a house, the bank will not lend you $1 Million to stick it into the stock market. The house is a physical asset.
Easy, the bank will lend you $1 Million to buy a house, the bank will not lend you $1 Million to stick it into the stock market. The house is a physical asset.
This is true Z. Banks are not going to lend anything to kids in their bedroom tracking and punting on Peanut the Squirrel and AI tokens, despite their track record. Doesn't matter if the kids can 100x and are superior speculators to the lanyard community. It's not socially acceptable.
As The Zwifter has just proven, IT GUY is speaking a foreign language that NZ 'investors' simply don't understand.
Try these guys big Z, all will offer at least 50 to 1 leverage, so 20k buys a mil
- CMC Markets
- Saxo Bank
- IG Index
I like IG for stock indexs, Saxo are very good for coverage, you can trade damn near anything.
As for crypto I leave that to the pimply faced youths, fortunes have been made.
'Are' being made I think. What's interesting at the moment is that the boomer coins are performing way beyond expectations, mainly because the institutions are buying. The kids don't really play with these as it's not as sexy and it's not where the 100x opportunities are. They're not recycling their gains into the Aotearoa Ponzi. They stay in their zone with stablecoins and the ol' rat poison.
A lot of ETFs are also double or triple leveraged
My share portfolio is up 41% YTD. And no tenant hassles or unexpected costs. My income portfolio has delivered a 20% gain. Its a shame more New Zealanders arent more stock market savvy.
May I ask how you trade? When I last looked, the options I looked at all seemed to come with significant brokerage costs or warnings of long resolution times. To be honest though, I was only looking at the NZ stock market at the time.
Note I'm fairly averse to trading, as my background research for my Masters showed that a) most speculators lose year-on-year, and b) the house always wins. So I'm more interested in real investment pathways.
"I was only looking at the NZ stock market at the time."
There's your problem.
NZ's stock market is quite limited in both breadth and depth. Oz is a tad better, but not much. For a really good selection you need to go to the big financial centers. (Sucks that there's a whole heap of extra admin involved for most Kiwis in keeping IRD happy.) If the selection is overwhelming, might I suggest looking at what some of 'aggressive' kiwisaver schemes are buying / holding / selling as a starting point.
If the selection is overwhelming, might I suggest looking at what some of 'aggressive' kiwisaver schemes are buying / holding / selling as a starting point.
Many do not transact in individual shares, rather they trade equity warrants or trade EFTs with disclosed allocations, they create performance by twisting asset allocations. If you buy a warrant you can invest your base capital and get overnight cash rates as well. not much incentive to try and stock pick US Markets too much anymore outside perhaps the Magnificent 7
Some of the NZ Kiwi savers schemes that hold NZ and Aussie shares do actively trade equities in these countries, but US not so much.
Always loved me a good warrant. ;-)
b) the house always wins
this is because the house rarely takes positions, they either find a punter to take the opposite side, or layoff on the other side of the spread.... (betting companies operate there own dark liquidity pools between houses not open to public) again many will just not understand the mechanics of book making in financial markets, or betting.
Its all about the spread or the greeks baby.
In related news SKC continues to woefully under perform the market.
I dont touch the NZX. I invest on the ASX through Commsec and Interactive Brokers.
~30% after tax for me. It's becoming a real conundrum: I've been renting since I sold my house in Feb 2022 and today my investments (none in RE) are both easily paying the rent and allowing me to save big to the point buying again isn't even a financially-wise decision for me. Even if RE continued to perform 7%/y on average, I'll have no problem catching up and grow savings much faster than that.
Same situation and timing of sale for me re house but too risk adverse to put my housing money into anything but cash. No time to recover if it went pear-shaped.
Granted that is great result, but lets tell the audience that the FIF rules will treat this gain in value as income and tax it accordingly - realised gain or not.
The majority of stocks on the ASX are FIF exempt. Some like REITS are not, but their dividend yields are greater than 5% so you are better off being taxed under FIF rules. Others like 360 you simply suck up the FIF tax in return for triple digit gains.
Yeah one of the most costly things you can do is avoid international stocks in order to save on FIF tax. When I moved back from Australia I did that and regret it. Now I'm mostly back in US stocks and a bitcoin ETF.
Well done KW, but I would back property over equities any day from personal experience.
The thing is property is far safer and you can leverage so much easier, snd you have control of it, unlike equities.
Example if an investor holds $20m of property investment and they go up 7% next year as the RB are calculating then that is $1.4m in potential gain plus rents!
Wouldnt be too many investors prepared to have $20m in equities as there is no doubt there will be another market crash as it is grossly overvalued due to super funds from around the world.
I would have a diversified portfolio over different asset classes, so property would be part of it. That is if I had money to invest. I'd even include crypto these days, as ridiculous as I find it.
It sounds like you chase last years performance IT GUY.
I am more a momentum investor, I only want the knees to the shoulders, willing to give up the head so as not to lose my neck. Single stocks are no longer my interest, too many cases of a bad news release, where you are simply less exposed in an EFT sector bucket.
IE long or short AI or agri or transport etc as a sector investment rather then names in them, names can be fun I owned Ren Tech once, so annoyed when they took that private. But for me now happier to find 1 or 2 baggers not 10 baggers.
i do wonder how much longer the US stock market can keep growing at the rate it has been, many are calling for a correction.
its interesting that a stock market inflation of almost 100% over the last 5 years is good but houses inflating by 21% is bad.
I guess its easier to see the true value in houses then a stock.
What ETF are you in? some of the ETF have very overpriced stocks holding them up IMO
Joe basic S&P 500 ETF hasn’t been too nasty this year. Maybe small caps for a while now.
I think what’s good or bad comes down to no one trying to rent a poorly maintained Nvidia to a poor family……..
I’m not ballsy enough to borrow to invest. If you want to go hard core borrow to buy MicroStrategy! 3x double down right there….
"its interesting that a stock market inflation of almost 100% over the last 5 years is good but houses inflating by 21% is bad."
Pfft. Gold is up 126% over past 5 years.
Wonder what Lord Orr has to say about that.
Like all the reserve bank governors have over the least 50? years. We don't hold gold. SDR for us in NZ. As Zwifter said no gold as no dividends/interest and holding costs. I like 5% or so of ones assets to be in the hard stuff, no ETF, gold mining company or any form of paper gold.
Eastern Europe central banks are hoovering up the gold like there's no tomorrow.
Ales Michl’s mission to inspect the precious metal held for the Czech National Bank was part of the governor’s stated ambition to double the country’s stockpile to 100 metric tons in the next three years. It’s increased fivefold since he took office in 2022 with an aim to diversify the bank’s reserves.
“We need to reduce volatility,” Michl, who grew animated when queried on the subject, told Bloomberg Television earlier this month. “And for that, we need an asset with zero correlation to stocks, and that asset is gold.”
https://finance.yahoo.com/news/world-biggest-buyers-gold-now-050000600…
The true value in houses?
"Who in there right mind would leverage into a loss making NZ property investment where the S&P 500 is up..."
It's all much clearer in retrospect IT GUY.
By the same logic you could also say - Who in their right mind would invest into S&P500 when Bitcoin has gone up over 100%.
And why invest in Bitcoin when you can make over 100% a day at the races
And why invest in Bitcoin when you can make over 100% a day at the races
More importantly, when the whole 'planned market' is gamed towards the boomers, why is it any surprise that the younger demogs don't want to feed the beast? Ultimately how does it benefit them? This is the issue that the ruling elite haven't really thought through properly. And now that it seems that cracks are starting to appear in the whole charade, even tradfi is having to go further out the risk curve to stay relevant.
You need to remove the S&P500 from this discussion, its a bit more diversified then the races or bitcoin, I am not saying they do not have a part in peoples wealth, many got into BTC when it was low value, hence even 1% of you 1mil portfolio when btc was $3 could be very very good today.....
ie 10k to 316 mil good
You need to remove the S&P500 from this discussion, its a bit more diversified then the races or bitcoin,
Don't forget private equity.
Am agreeing with DGMs don’t become an investor (spruiker) you need balls or solid brass - will take me a while again to have positive cash flow or capital gains - don’t do it either buy or rent :)
Not all investors are Spruikers. It's not a stretch to assume well seasoned investors don't need to Spruik. The market ups and downs are all part of quietly and patiently getting ahead financially over time. They're most likely genuine high net worth.
The article completely ignores the further negative impact of loss of interest deductibility as expense.
The tax on any mortgaged property atm is what kills any potential investment calculations - this year slightly better but still a big impact on leveraged property investments.
Remeber the good old days of LAQCs
Thats if you can rent it out right now.
@toye - also a good point
Waitemata & Gulf ward up to 24% rental yield, whaaaaaaat!? that sounds incredible and very hard to believe.
But I guess, 'leasehold' makes it sound plausible, as the article suggests
Cheap leasehold apartments
The quoted rental yield is high because the purchase price is low, but gross yield does not take into account that the landlord then has to pay for body corporate fees or ground lease payments on top of the mortgage, and rates. If this article looked at net rental yields, it would be an entirely different story.
I’d be careful with Auckland CBD apartments. University of Auckland is planning to build lots more student accommodation over the next 2-3 years
You'd be right with 30sqm shoeboxes. But probably not with regards quality 80+ sqm 2 & 3 beds.
I’d be careful with Auckland CBD apartments. University of Auckland is planning to build lots more student accommodation over the next 2-3 years
So they should. Why should wider society shoulder the burden, particularly with the international student scam? Essentially infrastructure needs to be provided for existing citizens first and foremost. Feeding the pockets of Vice Chancellors is secondary.
Have you seen what they charge for res ?
It's a bloody rort. I notice certain Iwi are well into the student accommodation property development/property management game as well.
918 townhouses for rent in Auckland on TradeMe. Way higher than I have ever seen. Goodbye rental inflation.
408 5+ beds too.
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