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How Do You Tell if A House Is A Good Deal?

The process of buying a house in New Zealand could be considered a significant milestone for most of us here. It takes time, effort, and indeed money; hence, it is entirely valid to expect every future homeowner to make the most out of their savings and future investment.

So, how do you tell if a house is a good deal? Well, it depends, and you’ll shortly see why. These are some of the factors you could perhaps keep in mind when observing a house for sale, to know whether you are hitting the jackpot or maybe should give it a miss:

Price

Quite predictable, right? But the truth is that price can be indicative of a good deal but not necessarily a determinant. We could all agree that it won’t be the same to invest $500,000 in an Auckland property as investing the same amount in, let’s say, the West Coast, where housing prices are naturally lower. This means it is best to start observing the area, the neighbourhood and see how the housing market behaves there to be able to compare and identify a good opportunity when it comes your way. Finding comparable data on the surrounding properties is a plus that aids the decision-making process. You could also check the Cap Rate, which is the price/earnings ratio compared to the rest of the area.

Once you find a reasonable price for your ideal market, you have to carefully analyse the house’s overall condition. It could be that the low price is actually hiding some critical faults or lack of maintenance, which can translate to a hefty expense for you to repair it. In these cases, we suggest you investigate a bit further, or even better, take a professional with you to inspect the house with their experienced eye.

Neighbourhood

While checking out the neighbourhood is recommended to get an idea of the value of the houses located there, also investigating the development plan in the area can give you a better idea of the potential value. A zone that is just starting to be built is likelier to give better property deals as well as returns, as once it fully develops, the prices will definitely increase, making it a great deal if you get in early.

Having a visionary mind for this matter can be highly beneficial, as it takes patience and time to prove this investment right. But when it does, you reap the rewards, while others regret not having had that perspective before.

Investments

If you are considering buying a property for investment, there are, of course, a number of investment options you could achieve, and the results will differ considerably depending on the timeframe of the investment. The value may vary significantly from year to year, making short-term investments riskier, whereas long-term investments tend to be more stable.

In some instances, some people use different rules to determine whether it will be a profitable investment or not, like the 1% rule, which states that you should be able to rent it for at least 1% of the purchase price to get a positive yield.

What piece of advice?

Now, if you ask any person in New Zealand what piece of advice they would offer to their 18-year-old self – if they could, clearly -, quite a few of them would reply: “buy a house!”. And it’s no wonder why this response is so popular. Over the years, property prices have gone up incredibly high, supporting the worldly-known affirmation that property and land prices always tend to go up over time.

In fact, in New Zealand, property prices have increased at a rate of fourteen per cent a year during the past eight years. So, yes, housing is always a good investment in the long term. This is simply explained due to worldwide price inflation and the law of supply and demand: the number of human beings is increasing exponentially, demanding more housing each time (higher demand) on an Earth that remains exactly the same size (lower offer).

Even though you may find ups and downs along the road, if you look retrospectively, those crises have been overcome, at the same time that – on average – property value holds up throughout the decades.

Get In Touch Today

Our advice? Best to call us as soon as possible. We are experts in Auckland Real Estate with a trained eye and can absolutely give you a hand to identify promising opportunities to get the most out of your investment. So get in touch with us today!