Welcome And The Real Topic

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Property cycle episode. I've got James back in the house. Hello, James.

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Buongiorno.

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It's been a while since I had you in.

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I know.

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And today we're going to talk about the property cycles.

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Yeah.

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I think you're just into cycling. Oh, yeah.

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Sorry, I got that topic wrong. We are talking about road cycling today. Imagine. Not the property cycle. Because no, I just think it's a really interesting position. We always like get caught in the now, right? And we think the property cycle, property, all I'm hearing is property is dead, property's never going to come back. And you know, this is the same thing we were

Why Property Always Moves In Cycles

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heard a number of years ago about, you know, the share market, financial market. So these things go in cycles. To me, it feels like we're at the bottom of the cycle. It's a really good time to be buying a property if you're a first-time buyer. And interest rates are reasonably low historically, so and prices are way off their peaks, especially in our region, maybe off 30 to uh 25 to 30 percent Wellington and Capity, and you know, they're down in Auckland now, and even the South Island is flattening off a wee bit. So I feel like that we are in we are getting near the bottom of the cycle. Taken's also think about that we've got an election coming up, so there's a lot of uncertainty. We have no idea who's gonna win that election.

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Well, today has been

Election Uncertainty And Market Nerves

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a bit scandalous.

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Oh, yeah.

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We had Prime Minister Ku.

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Mr. Luxton, but then managed to hold on to his position as Prime Minister.

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So he came back three hours later. Yeah, and yeah, it's gonna be interesting to watch this year what's gonna happen. But you're right, like the property people often forget, and I think you and I have lived long enough now to work through multiple property cycles. The properties tend to go up and then down and then up and then down and then up again. And the fundamental for me is I always think back when I brought my first property over 14-15 years ago now. Yeah, 15 years ago. And that property has still tripled in price since then.

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Yeah.

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Yes, it quadrupled in COVID times, but then it went back down again. But who is to say that in a few years' time it won't go back up again?

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And I think what we should do is really with the COVID time is we need to take those two two years out of our psyche and go, that was a really, really unusual period. And

COVID Price Spike And FOMO Fallout

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what we're seeing now is prices went up way too much and way, you know, way too quickly. And now so we saw an extended increase in prices. What we're seeing now is the balancing out of that. Is this taking a little bit this this movement down? Is this taking a little bit longer than other downtrends have taken because that uptrend was quite magnificent? So I think we need to keep that in consideration that that was just a really unusual period.

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And I want to talk about that period maybe now, maybe separately, I don't know. But I think we do need to dive a little bit into that and the follow follow-through effect it had on people that now sort of stuck with those properties. You know, people that were having a FOMO and they were jumping in and buying with their friends, with their family members, and now they want to move overseas or they want to move apart, yeah, and they can't.

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Yeah, it's a it's a big thing, isn't it? Like they're losing a hundred to two hundred thousand dollars on their on their property potentially.

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And so, what do you do in those situations? So it'd be really cool to unpick that topic as well, I think, for our listeners. But if we go back to the property cycles for a moment, you know, the question that we always get asked is is it a good time to buy now? Is it a good time

Should You Buy Now Or Wait

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to buy and wait it out maybe six months' time or a year? My suggestion has always been to people if you can buy now, if you can afford to buy now, just buy now. Because you never know what's around the corner. The property prices could go up. They could also go down.

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Yeah, absolutely.

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You don't know that. And with the election, you know, coming, I mean, if labor gets in, there's a lot of talk that investors will be getting rid of their stock. Yep. Because if the capital gains tax comes back and things like that, that won't be beneficial for investors to hang on to the rental properties. But I don't know. What if you're not going to do that?

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No, no, well, certainly what I from what I understand, capital gains tax is that in other places where there are capital gains tax, such as Australia and on property and places like that, it's has really no impact on on the on the value of properties over time. So I think once we get over the initial shared trauma trauma or trauma? Trauma? I can't remember. That that's I don't see that as being a huge issue. But and I would agree with you, I we don't know for sure that property prices aren't gonna go down, but I totally agree that if you're in a good position now uh to buy a home and you're a first home buyer, if you're if you want if that's something that you really want as your goal, then it's a great time.

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And we've got a fantastic case study. Stay tuned, we're gonna unpick it in the next episode for you, where we had a first-home buyer that didn't believe they can get on the ladder, and they they did. So stay tuned for that episode as we will give you real figures, real numbers that we've worked with. So, property cycles, we're seeing the downturn right now. I was looking at some data and our counterparts that do amazing podcasts, and they were comparing Auckland versus Christchurch, you know, whether you should invest here or there.

Auckland Vs Christchurch And Running Numbers

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At the moment, they're both sort of down.

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Yeah.

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Auckland has much, still much higher entry price versus Christchurch, but they're saying over the term Auckland will probably have better capital gains for you versus Christchurch will have better yield position. So, you know, if you're sitting on the fence thinking whether you should buy, invest, reach out to us. Yeah, we are free to run your numbers and we can sit down and look. And you know, lately what I want to say, James, is I had so many listeners reaching out to me, which makes me so, so happy. It's like, wow, people actually reaching out, we'll get fan mail.

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Boxes of it. I had to, you know, honestly, I had to step over it all on the way in here. Oh, thanks.

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But you know, we are doing this for you. So if there are any particular topics you want us to attack, please let us know. And we'd love to, because sometimes we don't know what you don't know. And only you know what you don't know. So if that makes sense. I speak, I'm speaking like Dr. Seuss right now. So um, yeah, reach out, we'll be able to help you and run some numbers for you and see where is the best place for you to go, whether you're buying, whether you're selling, whether you're looking to hang on to a property. Done a lot of those at the moment as well, talking about the property cycles, as a lot of my clients that can buy next one and still hold hold on to the existing one. We're just holding on to them and then we can sell them in 12 months' time or 18 months' time when the property marks.

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I'm certainly meeting with a lot of sort of older people as well that are they have more than one property and they're looking to sell one of their properties to for their retirement, but they're looking at other options because it's not a great time to be selling their selling their house. But one thing if you are if you are really interested in following where the property cycle is at, one area of the economy to look at is net migration. So

Net Migration As A Key Signal

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if you are what we're seeing in Australia is house prices really come off the boil over there, and we tend to attract more migrants, net migrants when well we keep more of our own people and we attract more internationals when Australia's not doing so well. So when they come off the boil, New Zealand looks better comparatively speaking. So keep an eye on net migration, that's beginning to pick up, and that of course has quite a big impact on house prices here because it increases demand over over time. So that's something to keep a look out for. But that is a bit of a political, you know, a bit of a political forecast.

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We'll leave politics out of this episode. Awesome, James, thank you so much. Lovely to have you, and let's do our next one. So, guys, stay tuned. We're gonna do a case study for you. Thank you.