An Attractive Investment City
It might surprise many Dunedin property owners to know that our city is coming to be highly thought of by specialist property investors.
Many investors I meet are convinced that Dunedin offers some of the best potential investment property of any city in the Southern Hemisphere. They like the fact that our property, despite recent price rises, still represents good value and offers an attractive return for a relatively low capital investment. Experienced investors look for net returns around 7% and they tend to prefer multi-unit type properties that have more than one income stream. But they are not limited to this type of investment property. Some prefer buying standard residential homes for rent.
Although the loan to value ratio restriction (LVR) of 40% equity for investment property imposed on banks by the Reserve Bank has affected many investors and slowed the level of interest in this kind of property, there is still strong demand for low maintenance property with attractive returns.
An Australian couple who made a special flying visit to Dunedin recently own residential property investments throughout Australia, Asia and the Middle East. They had carried out a study of Australian and New Zealand centres to find the best value residential investment areas before choosing to spend several days in Dunedin.
As well, there are still regular visits by North Islanders looking for property investment in Dunedin. I’ve also noticed recently several Aucklanders who have decided to move south for lifestyle reasons, even though they don’t have definite job prospects. One couple said recently they are looking forward to swapping their three-hour daily commute to and from work. Let’s hope these are long-term gains for our city.
Surveys of property investors regularly find that an overwhelming majority intend to hold their property long term. An ANZ survey last year found that 89% of property investors plan to keep their holdings for a long time. That is certainly my advice to any new investor as well. Buying and selling in short term periods incurs costs that defray gains and, of course, the Government’s capital gains tax on the profit from sale of properties that are not a principal place of residence and sold within two years further defrays any gains.
One property I marketed recently was bought by a Californian investor who plans to buy several more properties here. So if you are thinking of selling that investment property you’ve owned for a while, now is a great time to market it, especially since there is a record low number of properties on the market. Call me any time for a no-obligation appraisal of your property.