Scenario #1 – an average market
On average, property prices tend to increase 3-3.5% over any given 6-month period (it’s 3% in Christchurch and 3.7% in Auckland).
For this example, let’s use 3%.
What would happen if this investor decided not to purchase this property and thought: “I’m good. I’m going to wait 6 months”?
On average, the property will increase $18,000, and they will have lost $18,000 that they could have made.
Scenario #2 – a hot market
However, not every market is average. There are times when house prices can skyrocket above the norm.
For instance, at its hottest house prices in Dunedin increased 29% in just 6 months. This is the fastest increase we could find over a 6-month period.
If an investor purchased a $600K property that went up by 29%. That property would then be worth an extra $174k.
So, if the investor waited 6 months, they would have lost the $174k they would have made.
Scenario #3 – a falling market
Having said that, sometimes property prices will fall. The fastest falling 6-month period we found was also in Dunedin. There, house prices went down by 10%.
So, on that $600k house, if you had timed that market perfectly and had waited 6 months for the lowest point in the market – you would have saved yourself $60k.
It’s essential to consider these 3 scenarios because when investing in property there will be a range of outcomes.
Yes, on average, property prices have increased by 3-3.5% over any given 6-month period. However, not every 6 months is going to be average.