Adapting to a changing market
Since Covid has reached our shores, the property market has seen a dip in listings on the market and a rise in values of at least double digits in most areas of New Zealand, providing capital gains across the country. Because of this surge, new regulations have been put in place such as LVRs restricted at 60% and minimum interest rates for existing buyers and landlords.
The surge in property values we are experiencing has caused decreases in gross rental yields, with Auckland seeing a reduction to almost 2% and an overall national average of 2.8%. As a result, costs, interest and mortgage rates have risen, lowering chances for capital gain during this uncertain time. COVID’s effect on the property market is undoubtable, and a slow in values and therefore prices may be inevitable due to this change in pace of the economy.
It is perhaps most effective during this time to focus on purchasing property with maximum yields such as a 6.8% yield for three-bedroom apartments in Newton/Grafton in Auckland or a 6.4% yield for one-bedrooms in Lambton, Wellington. Focusing on these secure properties while controlling costs and paying off principal may be the focal point as the market experiences COVID driven changes.