These days Auckland is the focus when it comes to renting and housing, but is such a huge market really the best market for investors. Too often investors forget that underrated markets can frequently be the better option for them in the long-term.
The Ripple Effect
Auckland property prices are sky high at the moment, making investors wary as to whether it’s reached its peak and looking for alternatives that may be still on the rise. The classic price ripple effect is taking place and other nearby markets in the country will likely have had gains also as a consequence of the strong prices in Auckland. Other cities most affected by the ripple effect are usually those where investors can see a strong economic centre and growth, and Wellington has these factors, with much infrastructure development, civic development and population growth. Moving away from the initial source of the boom allows investors to reap the profits without tying up capital in a market that may have reached it’s peak for the time being.
In booming markets like Auckland, bidding wars can be more frequent and demanding, bringing up the price of the property and potentially bringing down the quality of the investment available to those with less to invest. Smaller markets have the benefit of containing less home buyers and investors to compete against, helping you negotiate a better deal while still acquiring a property that will be attractive to tenants and profitable long-term.
Smaller Barrier To Entry
Less competition can often mean properties are going to be less expensive, making it easier to get started in the market and be successful, as the lower initial cost can allow you to experience positive cash flow more quickly than if you were purchasing in an already booming market.
Provides The Opportunity For The Market To Boom
An investor looking to fast-track their portfolio cost-efficiently should invest before prices and popularity start to rise. Look for suburbs with local villages and amenities growing in popularity, as this can become the hub for a sudden rise in popularity within the area. Falling vacancy rates, and an increasing number of auctions in the area are other signs that the market is about to surge in value.
Portfolio diversification is key to mitigating risk and maintaining reliable capital growth. Looking at markets such as Wellington allows portfolio diversification for those who have property in other areas allows exposure to the only market in the country that is so strongly underpinned by the government sector.
Like any investment opportunity, investing in real estate comes with it's own risks and benefits. Try using these tips to help find the best property for your investment goals and circumstances, and help you become a successful investor Wellington.
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