Property Investment
3 min read
This week, Ed and I hosted Property Live – our monthly webinar. We shared our predictions for what could happen in 2024.
But producer Dave (our videographer) is in Indonesia. So it wasn’t recorded.
If you missed it, here are our 12 predictions for next year.
Every family has a grumpy uncle/aunt/cousin who makes crazy predictions.
It’s the person at the family BBQ who says things like:
Don’t let them dampen your property investment ambitions.
While Uncle Lester sounds confident (and seems to know a bit). He’s usually not an expert.
This is the Dunning-Kruger effect. When someone learns a little about a topic, they get really confident. So, you think they know more than they actually do.
Keep that in mind when Uncle Lester butts into your Christmas conversation.
Building consents peaked in February 2022. That month, there were 4,200 consents issued.
Now we’re down to 3000 consents.
It's a massive fall and will probably continue.
Property prices have fallen while the cost to build has gone up. So many developers will sit on their hands, waiting for prices to rise.
Property prices fell 18% since the peak in November 2021.
Prices then bottomed out in May. Since then, they’ve crept up 3.8%.
That's not enough for the average punter to notice.
But once we get to March, expect Kiwis to change their tune and take notice.
By April, property investors will probably pay less tax.
The bright line test will likely go back to 2 years. And interest deductibility will start to come back in.
ANZ thinks interest rates will peak in March 2024. But in May, they’ll still be high.
That will hurt your cashflow. Over 9 in 10 properties bought today are negatively geared.
By June, I’m picking that Chris Bishop (National’s housing spokesperson) will cut KiwiBuild.
I'm not convinced developers need or want it anymore. Too many hoops to jump through. It’s easier to sell to the open market when prices bounce back.
Right now, inflation is 5.6%. By the time new data comes out in July, the banks are picking that inflation will be between 2.5% and 4%.
Some prices are already starting to decrease faster than expected.
There are a ton of people moving to NZ right now. Migration added 110,000 people to our population over the last year.
These people need somewhere to live. That puts pressure on the rental market. I’m picking that rents will go up faster than 5%.
I reckon Adrian Orr (The Reserve Bank governor) will bring in Debt-to-income ratios by September.
That will make getting a mortgage for an existing rental property a bit harder.
New Builds won’t have to follow this new rule. Once again, the Reserve Bank is pushing property investors towards New Builds. They want to grow the housing supply.
By the end of the year, we should see interest rates lower than they are today. It could be a bit sooner.
But by October, you should notice the falls.
Wholesale rates are trending down. That means it’s costing the banks less to lend you money for a mortgage.
So I reckon the 1-year interest rate will be in the low-mid 6’s by the end of next year.
The property market has been slow over the last year. That hasn’t impacted developers’ bank accounts too much.
They sold lots of houses in 2021 and have been finishing them over the last 2 years.
Developers get paid when they finish houses. So they’ve had money coming in the door even while they haven’t been selling much.
But that impact will come. Once they’ve finished their pipelines, some builders will go bust.
Who knows how many of these predictions will come to pass.
But over the next year, I’ll be here every week, keeping you updated with Private Property – this newsletter.
We’ll also be there every day with the Property Academy Podcast. No matter how you want to learn about property, we’ll be there.
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.
