Property markets move in cycles; moving from the bottom, through the growth phases and back to the bottom over a seven to ten year time period.
This is why, as a property investor, the most important factor you must grasp is the ability to forecast property market trends. When you move ahead of the market – anticipating where growth will occur – you can purchase at the lowest price and achieve the greatest gain.
The following property market trends are like signposts along a highway – when you watch for them and know what they indicate you are more likely to succeed at your investing efforts:
- Low interest rate environment – encourages people to get into the market that delivers upward pressure to the rents and/or property values.
- Supply and demand – affected by population growth, interest rates, government policies and consumer sentiment. Right now cities such as Wellington are experiencing a massive undersupply.
- Capital city yields – Major cities such as Wellington and Auckland are full of bustling activity, huge infrastructure spend and provide a convenient lifestyle for tenants. People want to live here, and that generally translates to higher yields for investors.
- Rising home sales – increasing sales are a strong indication of confidence in the markets and it’s that confidence which drives prices upward as more and more individuals compete for a limited number of houses.
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Positive Real Estate