The times of skyrocketing property values are pretty much over right across NZ.
Auckland along with other main centre’s have been in decline for a while now, and the rest of the country that has still been pumping along strong is now well and truly at its peak and starting to taper off, with price corrections likely to follow Auckland’s lead.
We are now seeing in the press almost daily, news stories about Auckland property values declining and some property owners now taking a loss selling for less than they paid.
So then, where to from here? Is the “Property Party” over?
Well for many ‘investors’ (read speculators) YES it will be over (until the next boom cycle in a few years anyway). As the majority of the investors active in a hype-fueled boom market only really have one party trick up their sleeves.
The only investment ‘strategy’ they know is what we’d call ‘Buy and Hope’. Where they buy in a rising market paying asking price if not higher and hope for growth in the property’s value. If their timing is right this can, of course, work out pretty well for them with the property value rising to levels well in excess of their purchase price.
This ‘strategy’ is however solely reliant on a rising market to make money. As soon as the market starts going sideways or even declines, these ‘buy and hope’ investors are no longer successful – so they withdraw and exit the market potentially for years until the good news stories of rising property values hit the headlines once again.
However, for those people in the know, those that we’d call ‘educated investors’ the ‘Party’ is only just getting started!
How so you may ask? Well, educated investors tend to go against the tide, we invest far more counter-cyclically. We buy when no one else is buying, we buy when there are lots of property listings on the market and there is little to no buyer competition.
In market conditions like this, we have a far greater ability to secure good properties at reasonable to great prices compared to what they would have normally sold for in a more heated market.
Just think about this for a second – If a motivated property owner really wants or needs to sell their property and there are very few buyers around and those few buyers have lots of choice of many property listings, what’s going to happen to the price if they really want to sell – It’s going to come down.
It’s in times like these in previous property cycles that we have secured some of the very best property deals at great prices well below what they would normally have sold for and valued at.
During the softer to even gloomy market conditions when the masses are not in the market buying, that’s the period we use to accumulate good quality property assets at far more reasonable prices. Also because we are buying at lower prices we also have higher rental yields, therefore, increasing our overall cash-flows.
We focus on creating our own capital gains, by 1. Buying below market value to begin with and 2. Adding further value by renovation and taking advantage of untapped potential increasing rental incomes or adding extra rental streams and therefore increasing the capital value in the process.
Any further capital gain we get from normal market movements once the market recovers and goes through the next upward growth cycle is merely a bonus on the top.
The market is changing fast, the tide is turning, and once it starts turning it tends to happen pretty fast.
Some great buying opportunities are now just around the corner, for those that are educated and ready to take action the next 12 to 24 months will provide some fantastic opportunities the likes that have not been seen for a few years now.
If you’d like to learn more about how educated investors invest and profit from property in any market conditions, then grab yourself a place on one of our upcoming Free Training Sessions.
Jump on one of our free training sessions here https://www.propertyinvestorcentre.co.nz/webinar/