Property Investment
Property Investment
3 min read
Skip or Invest? My Take on 9 NZ Property Markets
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Property Investment
3 min read
Author: Andrew Nicol
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
I recently did an Instagram reel where my social media manager threw different locations at me, and I had to say: skip or invest.
It got a lot of comments with people wanting to know why I’d skip or invest in these areas.
So here they are, with the numbers to back them up 👇
Just keep in mind that this isn’t financial advice. It’s my take on where I am investing right now.
Make sure you talk to your Opes financial adviser before making a decision.
Rotorua – Skip. Definitely skip.
Rotorua house prices are still down about 14.5% from their peak and have barely bounced.
Property prices look about 7% overvalued. So I don’t think prices have fallen enough to represent good value.
And for the last 8 years, Rotorua has had negative internal migration. That means more Kiwis are moving out of Rotorua than the Kiwis moving there.
Add that all up, and the numbers just don't stack up for me right now.
Wellington – Invest in two years.
Wellington has had a rough run. Prices are down about 27% from their peak.
But that's exactly why I'm interested. But, in two years, not today.
Wellington is starting to look undervalued. So the buying opportunity is forming.
But the rental market is still soft. There's a lot of stock on the market, and public sector job cuts have hit tenant demand.
I want to see that stabilise before I'll start investing.
Nelson – Skip.
Nelson is a small market with limited rental demand. Over the last few years, more people have been dying than being born.
You’ve got negative internal migration (like Rotorua). So more people are moving away than coming in.
So long-term, I don’t like those demographics.
It's a beautiful place to live, but beautiful doesn't mean it's a good investment. The market is too small for us to find consistent opportunities for investors.
Rolleston – Invest.
Rolleston is one of the fastest-growing towns in the country. Stats NZ expects the Selwyn district population to grow 47% over the next 25 years.
It's affordable. It's close to Christchurch. That’s why my team at Opes works with developers there who are building properties that stack up for investors.
Palmerston North – Skip.
Palmerston North has decent yields on paper. But the capital growth has been inconsistent. And the population doesn’t look like it’ll grow much.
We've looked at it, but right now we can find better opportunities elsewhere.
That’s different to what my economist (and podcast host) Ed said in this video. But I think he’s wrong 😅
Tauranga – Invest in three years.
Tauranga is a great long-term location – strong population growth. People love the lifestyle. But house prices are still expensive.
The average property is over $1 million, and the yield is low.
So you’re paying an Auckland price to NOT live in Auckland.
I think it needs more time for prices to become attractive relative to the rent you can get. My best guess … give it three years.
Invercargill – Skip.
Invercargill has been one of the best-performing markets in the country – house prices are up 22% since the bottom.
But that's exactly the problem. Invercargill is now about 24% overvalued relative to its long-term trend.
As one commenter put it: "Invercargill deals aren't what they once were." They're right.
Auckland – Definitely on my invest list.
Auckland is still about 22% below its peak.
Our data suggests it's around 9% undervalued.
Rental demand is strong, and we're finding good opportunities in suburbs closer to the CBD. These are the parts that were previously too expensive for the yields to work.
Now that prices have come back, the numbers make more sense.
Want to check your own area?
If your city wasn't on this list, you can look it up yourself.
Use Area Analyser to get the latest house prices, yields, and market cycles for 1,000+ areas across the country.
Managing Director, 20+ Years' Experience Investing In Property, Author & Host
Andrew Nicol, Managing Director at Opes Partners, is a seasoned financial adviser and property investment expert with 20+ years of experience. With 40 investment properties, he hosts the Property Academy Podcast, co-authored 'Wealth Plan' with Ed Mcknight, and has helped 1,894 Kiwis achieve financial security through property investment.
This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.
We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.
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