Following on from the earlier post about what properties had sold in the Auckland Apartment Market recently this is an update from then with a few more sales going under the hammer.
These are the results from a recent City Sales auction.

Many investors are asking, “what’s the right type of investment for this new era?” After all you’d have to be living under a rock not to realize that our property markets will be very different in 2011.

If having survived the last few years of turbulent times in property, finance and the economy has taught us anything, it’s that we need to start taking a different approach to money, how we value it, procure it and use it.

So back to the original question – what’s going to be the best investment in the years ahead?

One thing is certain: If somebody tells you they have found “the perfect investment” be very skeptical and ask lots of questions, because chances are they’re trying to sell you something you just shouldn’t buy, After all there is no such thing as the perfect investment.

The things I look for are:

• liquidity (the ability to take your money out by selling your investment);
• securable (the ability to borrow against your investment);?
• easy management;?
• strong, stable rates of capital appreciation;?
• steady cashflow;?
• a hedge against inflation; and?
• good tax benefits.?

When you look at the major asset classes, you will recognise that not many fit the bill when it comes to all six of these criteria.

Michael Yardney uses a couple of terms when describing what he thinks of as the 2 main attributes an investment should have…

The instability of our world economic markets and the fickle nature of our local markets means that you’re going to have to invest in assets that are both powerful and stable.

By powerful, I mean that to act as a hedge against inflation they must have the ability to grow at high, wealth producing rates of growth. In other words, you’re going to have to be able to leverage or borrow against them.

By stable, I mean your investment should grow in value steadily and surely without major fluctuations in value.

Many investments are powerful and many are stable, but only a few are both. Prime residential real estate is one of the investment vehicles that has both power and stability in spades.

Now that doesn’t mean it’s perfect, because property is not as liquid as many other investments. It can take months to get cash out of your property portfolio, if you sell your properties.

You may be able to get cash out quicker by borrowing against the increasing value of your property, but even this can take a month or so to organise.

While some might see this as an issue, that relative lack of liquidity is one of the virtues of property as an investment vehicle.

Why?

Because the only way for an investment to achieve liquidity is to relinquish some of its stability. If it is liquid (easily sold like shares) it is more likely to have wide, more volatile fluctuations in value.

By the way some types of property are more stable than others…

I like investing in capital cities and major towns where there is a large population base, which means there will always be buyers and tenants for my property (if I own the right type of property.)

Now here’s another way of looking at what makes a good investment…

Many financial planners recommend ‘when-to’ investments, which means you have to know when to buy and when to sell. Timing is crucial with these investments: if you buy low and sell high, you do well. If you get your timing wrong though, your money can be wiped out. Shares, commodities and futures tend to be ‘when-to’ investments.

I would rather put my money into a ‘how-to’ investment such as real estate, which increases steadily in value and doesn’t have the wild variations in price (if, and only if, you buy the right type of property.) Yet is still powerful enough to generate wealth producing rates of return through the benefits of leverage.

While timing is still important in ‘how-to’ investments, it’s nowhere near as important as how you buy them and how you add value.

‘How-to’ investments are rarely liquid, but produce real wealth.

Most ‘when-to’ investment vehicles (like the stock market) produce only a handful of large winners but there tends to be millions of losers. On the other hand, real estate produces millions of wealthy people and only a handful of losers.

Having said that if you also get the timing right with property investment, if you buy at the right time in the property cycle, it can massively accelerate your investment returns.

And with a new stage of the property cycle upon us, this stage will create a new group of property multi millionaires. But if history repeats itself, and it surely will, many investors will get it wrong.

In fact most property investors, won’t ever develop the financial independence they deserve.

In part because you can’t just buy any property today and hope it will make a good investment – the markets are being very selective.

And you can’t just listen to anybody’s advice… you know those who say come to my weekend seminar and you won’t ever have to go back to your job, or you’ll be able to retire by the end of the year.

However, there are great opportunities out there NOW!

If you want to be one of the successful property investors and benefit from the opportunities 2011 will bring then start the ball rolling and set up an initial meeting where we will see if we can help you, if we can we will let you know how and if we can’t we will let you know that too.

thanks to Hot Property Investments

The volume of residential building work has slumped almost 40 per cent in two years according to official figures.

The volume of residential building work put in place fell a further 5.4 per cent in the September 2009 quarter, and is at its lowest level recorded in eight years according to Statistics New Zealand.

This slump in building activity will flow through to investors in the form of an under supply to the housing demand and see property prices increase in value as well as a possible increase in rents.

Regions with high net migration will see the most benefit of this potential housing shortage.

This will not be around for long however we do have more properties like this one coming to us on a regular basis.

Purchase Price $385,000 and the registered valuation for mortgage purposes has come in at $425,000.

Excellent value. Be quick.

There are very few of these left so be quick to drop us a line and get more information on how you can get into a property built specifically for investors by investors.

The Orchard is a fantastic new development just minutes from the beach. The region is quickly developing into one of New Zealands largest cities and with the projected capital works for this area the Orchard is going to be one of New Zealands best investments for capital growth.

This is going to be one spectacular development.
Would you like to know more? Join our mailing list using the form at the top right of this page and we will send you details as soon as we have them at hand.

Property Investment Analysis (PIA) program is an essential decision tool for investors.

It will analyse the capital growth, cash flows, and tax implications for any investment property and provide instant feedback on the projected after-tax cost and rate of return. The software will compute cash flow projections for up to 40 years and has facilities for changing more than 100 variables including property price, rent, capital growth, inflation, deposit, loan type, etc. The internal rate of return (IRR) and the cost-per-week are recalculated automatically whenever a change is made.

This tool is used by professionals across Australia and New Zealand and we offer to complete these reports for clients at a cost of $100 per report.

NZPA | Thursday November 26 2009 – 03:06pm
Average weekly spending on housing was unchanged in the year to June, Statistics New Zealand (SNZ) says.
The household economic survey put average weekly housing cost spending at $231, while the median was $156.
For all households, average weekly spending on mortgage principal repayments fell $3 from the June 2008 year to $37 in the June 2009 year, SNZ.
Mortgage interest payments were down $2 to $80, but property rate payments were up $2 to $25 and property and ground rent payments lifted $6 to $78.
Median weekly mortgage payments declined 4.8 percent to $312, from $328 the previous year, having been $256 in the June 2007 year.
In the latest year, 120,000 or 25 percent of households with a mortgage paid more than $500 a week in mortgage payments, down from 28 percent or 135,700 households the year before, SNZ said.
The median weekly mortgage payment in the Auckland region was $414 in the latest year, in Wellington it was $340, and in Canterbury $318.
The 31 percent of households who did not own the dwelling they lived in, and paid rent, was unchanged from a year earlier.
For households paying rent median weekly spending on rent was $241, up 9.5 percent from $220 in the June 2008 year.
Houses in Auckland paid the highest median rent at $300 a week, which was $50 above the next highest amount in the Wellington region.
Nationally, total housing costs accounted for 15.3 percent of total household regular income, down from 16.1 percent in the June 2008 year and 15.6 percent in the June 2007 year.
Regionally, housing costs to household income ratios ranged from 12.9 percent for the South Island, excluding Canterbury, to 16.3 percent for Auckland.
Among renters, 44 percent of households who did not own their dwelling spent 25 percent or more of their household income on housing costs, with 19 percent spending more than 40 percent of income on housing costs.
In contrast, 19 percent of households who owned the dwelling they lived in or held that dwelling in a family trust, spent 25 percent or more of their household income on housing costs, with 6 percent spending 40 percent or more.
The median annual household income from all regular sources was $63,867 in the June 2009 year, up 8.5 percent from $58,888 a year earlier.
Average annual income was up 5.6 percent to $78,876.

http://www.nbr.co.nz/article/spendin…pending-115502

Property values in Tauranga declined by eight per cent in the last year, calculated over the three months ending June 2009 in comparison to the same period last year.

This, according to the latest figures released by QV valuations. It is an improvement on the 9.4 per cent annual decline reported in the May figures and prices have started to move upwards.
The New Zealand dollar remains strong. It may not be as good for our exporters and there is a bleak outlook for the agricultural and employment sectors, but I think things will remain fairly level in the real estate price area.
Property values have the advantage of a lack of listings available, which creates a limited supply. On the buyers’ side, the low interest rates and a perception the market has leveled out stimulates the desire to buy now. This should keep things heading in a slow but generally upwards direction.
Typical of a location where high growth rates are expected, the rental yields seem to be hovering around five per cent – or less, in more desirable locations. What is really interesting is the level of rents in some of the more remote suburbs. I think this is a reflection of what is now being termed reluctant landlords; the investors who built homes with the idea of selling them but couldn’t as the market turned and have therefore ended up becoming landlords.
Some of these rents are, I think, unrealistic due to the location, however, the quality of the homes is fantastic. This creates a dilemma for the ‘reluctant landlord’. After all what do you do – drop your rent and then receive a very low return for your investment or hold out for the higher rent but the place then remains empty for week after week, month after month. In my opinion and from my experience, the best idea is to drop the rent. It is better to receive 52 weeks of rent at 10 or 15 dollars less than to have your place empty for three months trying to squeeze an extra $15 out of the market.
As an investor you need to control your cash flow as much as possible and having an empty investment property does not help do that.