by Super User
in Blog
The outlook for Property investment in 2018
The outlook for Property investment in 2018


January 2018 has arrived and Landlords maybe feeling nervous about their investment property.  Some may well be wondering if it will still be viable to invest in property?  Property investment is almost a national past time in New Zealand with a lot of people relying on this for their future financial security and retirement.  So what is causing this change of outlook?  There’s definite cause for their concern too.

Well there are a number of Changes being made by Government and with that comes a degree of nervousness about will property investment still be profitable?

So what are the changes?

  1. First there is the ‘Bright line test’ moving from two to five years where if you make a profit on selling a property you will be required to pay capital gains tax.
  2. Then there is the extra costs and compliance with insulation by July 2018 and maybe even a WOF for rental properties.
  3. There is the prospect of a loosening of tenancy conditions whereby with such things as a rent increase only once per year (vs., current 6 monthly) longer notice periods for vacating and the ability for tenants to have pets.
  4. There is also a perceived tenant bias with recent tenancy tribunal cases.

So what is 2018 and beyond going to hold for property investors?

Well as always with change it depends on how you look at it, ie. The glass is either half full or half empty.

Some investors are thinking that it is time to sell up and move onto something else.  But what would they move to?  Share market?  Well you would need to go offshore to get a good return for your money with share investment and the risks come in all shapes and sizes, so is that where property investors really want to go?

The reality is, as the saying goes, ‘there is no free lunches’ so at the end of the day added costs to property investors will be passed on to tenants one way or another or just over time.  In the long-term landlords will have to pass on cost increase with steeper rental increases or landlords will sell up and our current shortage of rental properties will get significantly worse, something the government can’t afford to let happen.

There is also a saying that “In every adversity there’s a seed of equal or greater benefit” and so there are upsides for landlords.

The loosening of the LVR restrictions will see a return of many investors keen to purchase while they can take advantage of less competition from their peers.

So in the end the future for property investment still looks just as good as it always has over the long-term.  One thing is for sure, property is one of the few consistent investments that provide a good return over time.

If you are looking for an annual return then the price vs the rent of the property is key, so looking outside Auckland is proving popular at the moment.  Approximately 50% of all properties in Northland are currently being purchased by people outside of Northland for this reason, along with people moving into the area.

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