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Holding on to investment property

While the temptation to sell residential investment property during a market downturn or close to a general political party election may be strong, taking a patient and long-term approach can prove more beneficial.

Wednesday, August 16th 2023, 10:00AM 1 Comment

by Sally Lindsay

It is important to consider the long-term consequences of such a decision, Claire Wilson, an active investor and co-owner of A1 Property Managers says. 

Holding onto property investments during challenging times can be a strategic and profitable choice, despite market fluctuations and impending political elections.”

Patience for market recovery

Market downturns are typically followed by eventual recoveries. By retaining residential investment property, investors position themselves to benefit from the potential market rebound. Historically, property markets have demonstrated resilience and a tendency to bounce back after challenging periods. Holding onto property during a market downturn allows investors to regain lost equity and capitalise on future price appreciation.

Stable cash flow

During market downturns, the rental market can remain relatively stable or even experience an upswing, as has been seen in Christchurch lately. By retaining investment property, investors ensure a steady stream of rental income. This cash flow can help investors navigate the economic uncertainties and cover ongoing expenses, such as mortgage payments, property maintenance, and taxes. Consistent rental income contributes to financial stability during challenging times.

Long-term investment strategy

Residential investment properties are typically part of a long-term investment strategy. Short-term market fluctuations should not overshadow the broader goal of wealth creation and passive income generation. By holding onto property, investors give the market time to stabilise, and position themselves to benefit from long-term value appreciation. Selling during a market downturn could mean missing out on future growth potential.

Political stability and policy changes

Close to general political party elections, uncertainty and speculation can impact the real estate market. Buyers and sellers may adopt a wait-and-see approach, leading to decreased market activity and potential price fluctuations. Selling residential investment property during this period could expose investors to the risk of unfavourable policy changes or economic uncertainty. Holding onto property allows investors to assess the post-election scenario and make informed decisions.

Portfolio diversification and risk mitigation

Diversifying an investment portfolio is crucial for risk mitigation. Real estate serves as a valuable asset class that diversifies investment holdings. By retaining residential investment property, investors maintain a balanced portfolio, reducing exposure to the volatility of other asset classes. Real estate's tangibility and historically stable returns act as a hedge against market fluctuations, enhancing overall financial security.

By holding onto property, investors are in a position to benefit from market recoveries, maintain stable cash flow, adhere to long-term investment strategy, navigate potential policy changes, and diversify their portfolio. Ultimately, retaining investment property during challenging times can yield significant financial rewards in the future.

Tags: investment

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Comments from our readers

On 6 September 2023 at 11:13 pm saketgroup said:
Interesting article, thank you for sharing.

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
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BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
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Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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