Rotorua Property Investors' Association

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June '13 President's Report

Latest market statistics from the REINZ show that while median house prices have increased over the last year, 90% of the increase came from Auckland and Canterbury, with most of the increase coming from Auckland. These two areas accounted for just over half of all property sales in New Zealand.

This result isn’t unexpected. Other provinces had higher property price increases than Auckland during the last boom period, while population growth and a shortage of new building since then has squeezed prices higher. Low mortgage interest rates have aided the situation but probably aren’t the main driver.

While the rest of New Zealand may not be experiencing house price growth like Auckland and Christchurch, there are factors that indicate a move in that direction. These include rental price rises, increases in people’s incomes and improvements in affordability.

Auckland’s price increases were initially led by pent up demand from home buyers, but increasingly investors are starting to make their presence felt. As local economies start to improve and people feel more certain about their future, the Auckland experience is likely to occur through other parts of New Zealand.

While many experienced property investors have been quietly picking up bargains while there has been less competition from other buyers, new investors are likely to become more active over time.

Many of these new investors will be looking for information and guidance to help them with their investments. There are many good sources of information but unfortunately the property industry also attracts a certain type who would take advantage of these new investors inexperience.

List MP Aaron Gilmore is a good and very public example of how these people can operate. Full of self importance and the ability to exaggerate and lie to get what they want, these people are very convincing.  Consider Gilmore’s tearful apology to the nation, how hard the situation had been on him and his family and stating a desire that he just wanted to move on. His act was extremely convincing. It takes a special person who can lie so confidently to reporters on national television and demonstrated to me that he was very practised at this art.

The worrying aspect of the Gilmour debacle is that he could pull the wool over so many people’s eyes and get to the position of being a Member of Parliament with such blatant character faults. And there lies the warning for new property investors. It is very easy to be taken in by plausible people who will say anything to get what they want.

If you are a new investor looking for information on how to start in this wonderful industry then please take a note of caution when looking for help. If you are an experienced investor and know of people looking to make a start in property, help them to decipher good information from bad.

I’m really proud of the Property Investor Associations around the country and the wonderful people they involve. These organisations provide wonderful information to investors of all experience, but are especially beneficial for new investors.

If a well oiled political institution can have the wool pulled over it’s eyes by someone of low character then a new property investor is going to be easy fodder. We should all question the advice we are getting and try to see the real motives behind people’s advice.

Tags: federation reports

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