The lockdown is an ideal opportunity for Kiwis to learn all they can about the investment property sector, experts say.
Christchurch-based Bayleys investments sales specialist Angela Webb says she’s been fielding enquiries from investors in Auckland, Dunedin and Invercargill.
Despite not being able to meet face-to-face, potential buyers are doing their homework and checking for potential deals, she says.
“They can’t view the properties so it’s a bit difficult, but it’s a really exciting time for the investment market. People are educating themselves, so when the lockdown does lift they will be ready to go.”
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Ed McKnight, a Christchurch-based economist at Opes Partners, says investors tend to buy when the market is down and sell when the market is hot.
Mortgage interest is an investor’s biggest expense, so with interest rates dropping, there’ll be more activation in the investor property market in the next few months, he says.
“Interest rates going down means that property becomes more profitable.”
People will also be looking to liquidate because they need cash, with investors negotiating good deals as a result.
“People will be looking to offload properties because they can no longer afford them and unfortunately have lost their jobs, which will result in some pretty sharp deals, we anticipate,” McKnight says.
New Zealand Property Investors' Federation president Sharon Cullwick says there will be a lot of properties for sale after the lockdown.
Landlords who rent their properties on Airbnb will now be losing income due to the closure of New Zealand's borders and the lockdown, and are more likely to put their properties on the market if they can't make ends meet.
“Everything is on hold. I’ve heard of a lot of landlords who have empty houses as they didn’t find tenants, especially those who have Airbnb rentals in high tourism areas.”
McKnight says areas where the economy is largely made up by tourism, such as Queenstown, will suffer the most
Otago, where about 18 per cent of the economy comes from tourism, or the West Coast of the South Island, where it’s about 16 per cent, will be hit the hardest, he says.
“They have a higher proportion of short-term rentals and Airbnbs, and if tourists don’t come then then the yield on those properties is much lower. People would have spent a lot of money to buy a property in Queenstown – it's the most expensive area to buy a house in New Zealand – and they’ll now have quite large mortgages.”
That’s where the opportunities will lie for long-term investments, he says, as it might take over six months for tourism to pick up again.
McKnight says Christchurch, which has been undervalued for a while, will keep being an affordable city for medium and long-term investment, he says.
“Typically, main centres like Auckland and Wellington don’t see as much of a dip in property prices when there’s a downturn. It’s the smaller areas in the regions that seem to see the biggest dip in prices.”
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