As an owner of an investment home in New Zealand, you'll usually end up setting up your finances one of two ways: Having higher rent yields to bring you income straight away, or negatively gearing your home so you'll get less rent money for now but reap tax deductions and home value profits in the future.
New research from the Ministry of Business, Innovation and Employment (MBIE) suggests many people are taking this latter path, with home values in Auckland increasing much more quickly than rents recently.
In their recent quarterly construction and housing report, it was noted that the average rental yield for Auckland had increased in the three months to the end of July, now sitting at $456 per week.
This is a 3.6 per cent increase on this time last year, so while there has been growth in the rental market, it hasn't surged forward at a huge rate.
However, this is nothing compared to the home value increases the MBIE recorded for Auckland.
These prices increased by 11.6 per cent, with the average value of a property in Auckland now up to $720,426, with the upward trend expected to continue into this quarter.
Home value growth overtaking rent increases is a relatively recent shift, happening in the last year.
But what does this mean for you?
It means, as always, that patience is the most important quality you can have when you invest in property. Sure, you probably won't make your millions off rent yields by Christmas, but with property prices still trending upwards, you'll likely be able to make an investment that brings you big money in the long term.
If you're looking at buying into residential property for your long-term gain, remember that quality investment advice is never far away – all you have to do is ask.
Here's to your financial independence!
Authorised Financial Adviser / Investment Property Expert