Forums / Property Investing / Overseas Deals / Aussies driving up NZ affordability for locals

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  • Profile photo of Hux001Hux001
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    @hux001
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    I’m interested in opinions about the buying frenzy in NZ by Aussies and what that does to affordability for the local population.

    Don’t get me wrong I’m one of those buyers too but my conscience begs an answer to this question.

    Any answer along the lines of “the market’s going to be driven up by others anyway so we might as well be part of it” doesn’t hold water as you could use that excuse for many things in the world today.

    I do have a few answers myself – but I’m interested in what others think.

    Profile photo of oziozi
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    Is it a fair assumption to say that the buying frenzy in NZ will follow trend experienced here is Australia over the past 2 years. i.e. prices are rapidly increasing, interest rates are low, affordability diminishes, then interest rates start getting jacked up, prices start to fall?

    I’d be interested to hear what others think to.

    Regatds,
    Ozy

    Profile photo of ANUBISANUBIS
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    I’d say the same thing that has happened in Tasmania over the past three years. Investor demand lifts soft prices to a new level, growth slows, yields fall. Early in investors sell-up starting anytime within the next 6 months to lock in profits and chase returns in other markets. Late comers pay higher prices for lower yields and have a little more difficulty off-loading down the track for the price they want which the market no longer reflects.

    Profile photo of geogeo
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    Hi Barry,

    For some reason, I think It’ll have the same effect as here. Sure prices have gone up slightly over there but the growth period hasn’t come (in my opinion anyway).

    Aussies are investing in NZ just as much as US investors are investing over here in Australia. The ratios are approximately the same in regards to investors investing in Australia or NZ. There are still many in NZ who don’t know anything about investing just as there are here. There are many single-parents and many others of differing status who either purchase their own home or cottage house to live in with their children or simply rent – I beleive the ratios to be the same as here and when we have a boom, NZ tends to follow in our cycle – whether it be the boom or bust cycle.

    As you’re aware, there are many hard-to-find +CF deals in NZ at the moment and this is where the growth period begins – but all this is another cycle. In the next 3-5 years, when infrastructure in certain towns increases, so too will the rental, thus the +CF increasing.

    Regards,
    George.

    I’ve found a way to help you save and earn whilst not selling or delivering any product. If interested, drop me an email or PM me to find out how

    Profile photo of vardenvoom27367vardenvoom27367
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    Hi Hux001

    Yep there certainly has been a buying frenzy in NZ.

    I come from a town called Palmerston North. this a university town in the lower north island.
    I’ve been living in SE QLD since the start of 2000 and when i got here i couldn’t believe how cheap houses were here in brizzy compared to my home town of 80,000 residents. As i saved for a place that all started to change, i got into the market by the start of 2002…luckly.

    My parents being property investors in NZ since the early ninties have seen their property portfolio double in value, while the rent in the areas they brought into has remained largely unchanged. They sold one place that needed some work and made a profit that worked out to about 18% p/a on their initial deposit.

    Since that sale in 2002 they have sat on the sidelines and watched the market go crazy. There were cashflow positive properties in popular areas when my parents started hunting around but now they cannot find anything that suits their conservative investor profile even in regional areas.

    So they wait…

    Yay my first post![strum]

    Profile photo of scottalotscottalot
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    I’m not concerned that the prices are increasing due to our contribution to their economy. Watch and see what the government does there and if they think it will be a problem they will put something in place to fix it and keep the prices down or the Aussies out. Maybe interest rates, tax on Aussie investors, who knows? If you see an opportunity take it or someone else will. There is not many Kiwis over there anyway – they’re all here! Sorry to any Kiwis online its just that Aussie / Kiwi thing [baaa]

    Scott Bevis

    Profile photo of Julian2Julian2
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    The free market is a wonderful thing, and don’t forget us Kiwi investors aren’t restricted from buying in Aussie.
    Those who own property here (NZ) will mostly have benefited from rising values, but I guess the flip side of this is that those young people wanting to buy their first home have to find ways of coming up with a higher deposit or settle for lesser valued areas.
    Don’t forget to have a good look around NZ when you are visiting your properties – it’s mostly tax deductable if it’s business related, and there are tons of good out out-doors activities to stimulate the mind and body. Welcome!!!
    Julian2

    Profile photo of MiniMogulMiniMogul
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    In a NZ town where the average income is 13,500 per annum, can you still today find a decent 3 bedroom house on a freehold section for 5 years income? YES!

    In Sydney, where the average income is 45k, (I think) can you find a decent 3 bedroom house on a freehold section for 5 years income? No way! you wouldn’t even get a decent unit for that much – and even then you’d have to go way out to the crap suburbs.

    Can the locals in these kind of towns buy a house for less than they are paying to rent? YES!

    Do they? NO! – I mean, some do, but the sort that rent for life don’t seem to.

    Why? Possibly education, bad money management, can’t get finance (because of bad money management)

    There are 90 percent and 95 percent mortgages for locals in NZ. So I reckon there’s no excuse!
    They could if they put their minds to it, they always have been able to, and they still can.

    In towns where we are finding positive cashflow, all that means in reverse is that it would be cheaper for the tenant to buy the property than to rent it.

    When I was a kid I remember asking my Dad how come there was a house advertised for sale for 1 dollar? the answer was, probably you’d pick up some unpaid rates, and have to do a fortune in maintenance. But still!

    Then say about ten years ago you’d see houses advertised for sale for 4 k, 12k.

    Two years ago you could buy in Oamaru for 27k close to town and nothing to do. (and believe me, I wish I had!)

    Now, it’s still affordable – just that it’s not as relatively affordable as it was before.

    What does that mean to me as an investor?
    well, i’ll be concentrating on the lower priced properties as I think there will be continued demand for them, no matter what the middle and top of the range properties are doing (which of course skew the ‘data’)

    cheers-
    mini

    joy to the world

    Profile photo of muppetmuppet
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    Hi Scott

    You said

    There is not many Kiwis over there anyway – they’re all here!

    Well then, where have all the Aussies gone?

    Probably in NZ buying up our cheap small town housing.[biggrin]

    Regards

    Profile photo of CastleDreamerCastleDreamer
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    Muppet, we aren’t all in NZ at the moment!!! Just some of us enjoying the great weather and fantastic sunshine without the heat!!

    CastleDreamer
    “+CF properties in NZ available now, email CastleDreamer or Minimogul”

    Profile photo of muppetmuppet
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    Hi CD

    26 degrees C in Tokoroa today. Seemed alot hotter especially when I was stacking my firewood.

    Jackie and I have been going for an evening walk and I can’t help but notice that a lot of houses have new paint on. The town is certainly looking good.

    Regards

    Profile photo of Robbie BRobbie B
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    I haven’t read the whole thread but I don’t think anyone should be concerned. Kiwis have been coming to Australia for years and take Aussie jobs in large numbers so pushing up prices in NZ is pay-back!!! :)

    _____________________________________________
    [withstupid]
    The forumite formally known as Big Rob

    Profile photo of Julian2Julian2
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    I don’t think anyone should be concerned. Kiwis have been coming to Australia for years and take Aussie jobs in large numbers so pushing up prices in NZ is pay-back!!!

    Mortgage Adviser
    No-one is concerned!!! Australia and NZ have had reciprical agreements for years – it’s great!
    But as for foreign people taking jobs, would you suggest that all the non-Aboriginal inhabitants of Australia have taken something from Australia …or have they added something to it?Australia (and New Zealand) are richer for their cultural diversity – socially and economically.
    We are great neighbours and we have more in common with each other than with most other nations. The idea that there are only so many jobs and that any new arrivals are likely to take them off the locals is a theory that has been discredited years ago. Economies grow as populations grow.
    Julian2

    Profile photo of Robbie BRobbie B
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    Julian, read some of the posts. There are obvious concerns and conscience issues.

    I also notice you left the :) off when you quoted me. :) is a smiley face sideways. It means I WAS JOKING!!!!!!!!!!

    _____________________________________________
    [withstupid]
    The forumite formally known as Big Rob

    Profile photo of Julian2Julian2
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    Big Rob,
    Oops, I must have been tired.
    Julian2

    Profile photo of PropertyLoverPropertyLover
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    Hi CastleDreamer,

    What’s your email address?

    Regards
    PropertyLover

    “+CF properties in NZ available now, email CastleDreamer or Minimogul”

    Profile photo of Hux001Hux001
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    Thanks guys some good answers in there, particularly from Mini Mogul. Market forces affect the economy everywhere and I guess I was just trying to justify my own actions to an extent in asking this question.

    I suppose if we are buying run down houses, doing them up and just asking a fair rent in return then other economic factors are more responsible for driving the market value and affordability of the properties for locals to purchase.

    Profile photo of MiniMogulMiniMogul
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    Hux,

    “I suppose if we are buying run down houses, doing them up and just asking a fair rent in return “

    Indeed. That’s exactly what I’ve done, apart from one when I got lazy and didn’t do a sot to it!

    Believe me, I have been in tears at a loved one telling me I was ‘ripping off the poor’ – this loved one earns several hundred K a year, and has a holiday home and an ‘own home’ but is not an investor.

    I did it anyway.
    I will never forget the agent actually got all misty in the eyes when I invited him over to see the house after the renovation.

    What was needed in these towns was investors to come in and SPEND. The people had no money to do the houses up, Housing NZ was selling up like mad, so the onus was on the private sector to come in and take over. Many many many properties on the market in these towns had long overdue maintnance issues – rooves, gutters, leaks, rot, paint, decor, the lot.

    My tenants love living in my properties. all I did was try to bring a little city style and standards into the small town rental house. It has been not only enjoyable but also extremely profitable and I feel a bit like an expat ‘local’ in my towns where I have parked some money.

    How the local businesses have profited, how the towns have profited from people like me who each went in and bought houses, renovated them and spent 10, 20k with local tradespeople and suppliers.

    You can see it in the main streets, and you can tell in other ways (like when you can’t get a tradesperson cause they are flat out!)

    cheers-
    Mini

    NZ Investor and Bird Dog

    Profile photo of Hux001Hux001
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    Well said Mini.

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