House price data can help property investors in many ways. For one, rising house prices can show where the best opportunities for long term capital gains are. Similarly, falling prices might indicate that it's a good time to buy – or that you are better off focussing on rental yield for the time being.
This is something to keep in mind after Trade Me announced that the average house price has dropped below $500,000 in January for the first time since October last year. Over the three months to January the average advertised house price was $498,550 – which is just over 1 per cent lower than the previous three months ending in December. This followed another decline of 1 per cent from November.
The report also showed that the face of property investment in New Zealand could be changing. While Auckland is still far and away the best performer in terms of potential capital growth, other regional areas are slowly improving. While house prices were up 13 per cent in the city of sails, most regions saw house prices grow more than 5 per cent.
This widens the net for investors who have focussed purely on the Auckland market. While the Hawke's Bay performed the best of the regions with prices up 23.7 over the year, home values in the Waikato grew 8 per cent over the year to January 2015. This offers some great capital growth opportunities for residential property investment in Hamilton.
Head of Trade Me Property Nigel Jeffries said the slight drop in average price is not something that investors should be overly concerned with. The low interest rate environment is encouraging investors and first time buyers to chase property all over the country.
"We've become accustomed to the strength of the property market in Auckland and Christchurch, with the rest of the country languishing behind. However recent months have seen this change and the majority of provincial regions are seeing strong year-on-year gains in average asking prices," he said.
If you want to know more about what house prices mean for investment, or just want some expert property investment advice, speak to an Authorised Financial Adviser like us here at Goodlife.
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