There is an increased investor presence in the Auckland property market, and what's more, it's being led by the little guys.
In a speech delivered on August 25 by the Reserve Bank of New Zealand's (RBNZ) Deputy Governor, Grant Spencer, the state of property investment in Auckland was discussed.
According to CoreLogic, investors were responsible for more than 40 per cent of all sales in the Auckland market during June 2015, an increase of 8 percentage points since late 2013.
Mr Spencer suggests that this indicates a fall in home ownership rates as a result of increased property investment. The demand from investors is certainly having an impact on Auckland property, as median prices have surged more than 20 per cent in the 12 months to July 2015, with the rest of New Zealand inching towards 12 per cent.
While this has undoubtedly made it harder to get a grasp on the property ladder, those who already own investment property in Auckland have been reaping the benefits. For example, had you bought a home in Auckland a year ago for the median price of $610,000, it could now be worth around $735,000.
It's clear, then, that the surge of values and demand in Auckland is largely accounted for by the rise of property investment. However, it's a particular group that's exerting the most influence.
"Their rising market share has primarily been driven by increasing purchases by small investors, with two to four properties, as opposed to investors with larger property portfolios," said Mr Spencer.
In an effort to control the soaring demand and property prices, the RBNZ has scheduled tighter lending conditions to investors to be in full effect by November 1 2015.
If you would like to know more about what the future holds for property investment, get in touch with a professional financial adviser.
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