Good time to buy property

There are encouraging signs that the worst of the property market decline is over, and for investors now is a good time to find bargains.

For the first time in many months share prices around the world have had a sustained rally and many commentators are now suggesting economic recovery either late this year or next.

There are also encouraging signs that the worst of the property market decline is over in New Zealand, with lower mortgage interest rates helping rekindle buyer interest and signs of stronger immigration numbers, including from Kiwis returning home as international job markets deteriorate, which will obviously create demand for housing.

It is often said that we Kiwis invest too much into property, which places property investors at risk should money flow out of the sector and into more “productive” areas. I don’t buy into that argument.

Yes, Kiwis do invest a lot of their retirement savings into property, but that is to be expected given the miniscule size of our sharemarket and the high risk profile of the stocks listed on it, the poor investment performance of managed funds and our inherent distrust of them, and the strong demand for rental accommodation.

Historically, property has consistently provided better returns than the alternatives, and I do not expect that to change in the near future.

I personally am getting a little weary hearing people say that property investment is to be discouraged because it’s not “productive”. Providing accommodation to those who need it is a productive activity, and the standard of accommodation provided by New Zealand landlords is generally of a high standard. By and large they also give a very good level of service, as good if not better than that provided by the state.

I think it is also about time that property investors, and particularly their associations, started hitting back when landlords are unfairly maligned by the press and politicians. Providing accommodation is an essential industry, and having the private sector provide the service is saving taxpayers billions of dollars.

Property is a great place to invest and now is a good time to find bargains and to lock-in finance at historically low rates.

In short, the numbers add up.