How to invest in New Zealand property market in 2020

How to invest in New Zealand property market in 2020


– Hi, it’s Connie from Prosperity Finance, sharing the best financial tips so that you can be more successful with achieving your financial goals. Now this time of the year
we’re all contemplating, you know, what the year has for us. So today I have a very
special guest, Gary, who has been on our program in the past to talk about what he think
the 2020 property market in New Zealand look like, and also share his great
investment strategy, so help you to purchase a good property that helps you to grow your wealth. So without further ado,
let’s welcome Gary. Hello, Gary. – Hello Connie. – Hi Gary.
– Thanks for having me here. – Thank you, Gary. Thank you for coming along. Now, a lot of people know you
are famous property coach, but just in case you know
anyone who watching this video don’t know you, can you
give us a brief intro about yourself, please? – Yeah, sure, I’ve been in New Zealand for over 20 years. Quite an old immigrant now. And then, yeah, pretty much started as, my civil engineer career, you know, was 20 years ago now. And then I started investing
in property in 2010. You obviously want to
achieve financial freedom so I can quit my job
earlier and all that stuff. And then in 2010 and then
the following six years, I managed to purchase 14 properties. And now there worth about $10 million. And in 2013 onwards, I
started to help others, you know, coach other students, etcetera. Helping them achieve, obviously,
financial freedom, as well. Yeah. – Oh, great, Gary, that’s a great purpose. And you know, you’re not
making not only making money from doing business, but helping people to grow their wealth as well. So, good on you Okay Gary
– Well, same as you, too. (laughing) – Thank you. So Gary, we got a lot of people wondering what the 2020 New Zealand
property market looks like. So that’s why I really
want an expert to share thee views, so can you tell us about what you think 2020 property market in
New Zealand look like? – 2020, I think it’s gonna be an up year. I think it’s gonna improve on 2019. So 2019, the first half of 2019 obviously was dominated by capital gains tax and then, everybody’s kind of waiting and want to see what happens. What labor will do,
and what Winston Peters will do with the capital gains tax. And obviously, fortunate enough, for, you know, a census
should prevail, logic prevails and then they canceled it. Canceled the capital gains tax proposal. And then pretty much after
that, soon after that, central banks, reserve
bank of New Zealand, step in and also trying
to stimulate the economy. So really, the first half
of 2019 was quite flat. There were a lot of deals, a
lot of good deals to be bought. And then, pretty much once
the capital gains was gone interest rates start to drop. I think year-on-year interest rates have dropped from 4.15,
3.99 beginning of 2019, to now, 3.39 for one year. That’s like 20% drop in
interest rates, right? So combined with, obviously,
no longer capital gains tax, that the market really
started to take off, really. Well maybe not take off,
but strong recovery. And then, auction success
rates for the second half of the year have, especially in Auckland, increased from like 20 percent, now to 60, probably plus, percent. So that’s a major improvement
in people’s confidence in the market, and is obviously reflected in the auction success rates
and also on the buoyancy of the market has come back. I think 2020 is just a
continuation of that. I think, probably prices,
especially in Auckland, will probably increase by five, maybe even up to 10 percent, this year. Yeah so, quite a good year. – Well that’s good to know. The downturn was only, you
know, last two years, so far. So if we expect some kind of growth, that’s great news for a lot of people. I used to have a client worry about, you know, they purchased
a property two years ago, and they dropped the value
a little bit on the paper. So that will be very welcome
news for them to hear. And for people who are
looking to buy property cause they kind of expect, there will be some capital growths in the near future. So that’s great to hear. – Yeah.
– Okay, Gary, so, given the interest rate
has dropped quite a bit and also the lending policy also relaxed a bit, people have more burrowing capacity now. And they really can, too,
to buy the right property. But a lot of people have a
job and they’re not familiar with property purchase,
and property investment. So when they get a pre-approval
they have another problem, what strategy to use to
buy the right property. So, what’s your advice for 2020 for people who are looking
to purchase new property? – I think for 2020, not even just 2020, I think any time you’re in the market, you got to focus on cash flow. Especially in main cities. In 2020, I would advise not
to buying in small towns. The small towns typically
are very cyclical. They’re very volatile. You can have a couple of
good years, very short years. And then followed by really long, stagnant of, basically prices
not going up very much. I really recommend buying in cities with at least 100K population. Obviously, Hamilton, sorry. Auckland, Hamilton, Tauranga, Christchurch, Wellington et cetera. These are the big cities and it’s always gonna
have more capital growth. And it’s really important
to buy cash for properties in capital gain cities. Big cities, but you want to buy, probably that are returning, especially in Auckland, at least five percent, I say. Four or five percent
depending on the area. Obviously the better the suburb, the less the cash flow, less it grows you. But it’s important that
you got to buy cash for properties because, first, you don’t need to supplement your personal income to
look after the property. That’s first thing. The second thing is also in the long run, cash flow allows you to borrow
more money from the banks. And the more cash flow you have, the more money you can borrow and the more properties you can buy. And then when property
prices go up in the long run, the more properties you have, the more capital gains you enjoy. Also, increasing rental income as well. And that’s one of the benefits of the last ten years was my now, my 14 properties and I obviously want to borrow more as well. – Thank you, Gary. Yeah, I think a lot of people focus on, purely on
capital growth potential, but forget about cash flow, so when they go to the bank,
the bank turn them down. So it’s important to keep both going, especially the cash flow,
otherwise you wouldn’t even be able to purchase the property. But as you said, Gary,
it’s not easy, you know. The better area, the less yield, so it’s not easy to get
best of both worlds. But I think you’re teaching your students to add value to the property to actually increase the yield, is that right? – Yeah, that’s right, yeah.
– Yeah, yeah. – So either adding bedrooms
or sometimes do conversions where you are adding multiple
incomes on one title. Or sometimes splitting to
multiple titles, as well. Obviously, it depends on the kinds of the student’s affordability, financial situations, things like that. There’s no one strategy that fits all, but that all strategies
always focus on cash flow, and then capital growth
is kinda like second. – Oh, great. It sounds like, as if there’s no one-size-fit-all
for my client’s advice. So probably investing, actually, you need to have some good knowledge to make a good investment. So you either find a good one, or if they’re too competitive,
you can’t find one still, as Gary said, invest in big cities. But maybe you leverage Gary’s knowledge. His experience, He is helping students to purchase right properties to help you to grow your property profilo and wealth. Thank you so much. And also, thank you for the audience watching this video. If you find it useful, please feel free to subscribe to our YouTube channel. And also, if you’re interested in getting help from Gary, his contact details is actually listed in the video below. Feel free to have a chat with him to see how he can help. Thank you for watching and thank you for Gary. We’ll see you next time. Bye, for now. – Thanks, Connie. Cheers.
– Bye.

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