I am looking at investing in the NZ property market( for positive cash flow)and have seen some great properties in Invercargill on the Sth Island. Not knowing the area that well at the moment and I know that Steve is very interested in the NZ market, I just wanted to know if anybody has had any experience in this town.
Shaun
Well I was never too crazed on it, but it has been making the news as a place on the up, so…maybe it has proved me wrong. I don’t have any money there though.
westan who lives close by is vibing it though, there is loads of stuff planned for the area, so it may be quite a good place, who knows really!
check rental demand, that’s a good first port of call
This may interest you:
http://www.stuff.co.nz/stuff/southlandtimes/0,2106,3245112a6011,00.html
Regards,
OziInteresting article Ozi.
On a seperate issue I have often wondered about those saying that the Kiwi market is 18 months behind Australia. Seeing as the last 12 months have seen negative growth in many parts of Australia does that mean that the Kiwi market as a whole has only 6 months of growth left?
I realise that you cannot generalise the whole NZ market with one brush but the idea does make you think.
I have two properties in NZ. One in Gisborne and one in Invercargill. As my wife and I need to upgrade our PPOR (kids!) I will need to sell the two Kiwi properties some time in the next 3-4 years.
Therefore I was thinking:
a) Sell at the end of the year at the peak
or
b) Ignore the negative hype as the market has a way to run yet and there are more gains to be made by hanging on for a couple of years.
I would be very interested in anyone’s thoughts.
Regards,
TimNo matter what I say, what I believe, and what I do, I’m bankrupt without love. (1 Corinthians 13:3b – The Message)
Hi Smithy,
You can get a direct flight to Dunedin for around $200 plus tax and accom for around $80 a night. Invers is certainly doing well right now but it is definitely a town that I recomend seeing before you buy (as with all places).
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Even if you leave the buying to someone else if you go there you could pick your street or even the block you want your investment in and have someone find it for you. That way you have the hardest part out of the way.
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If you are going to map the place out I suggest at least 3 to 5 days to get a feel for the place.
.
Average rents are on the rise at the moment according to the local property investors association. This means that yields will again improve. Hopefully, there will be some good buying before this translates into price pressure.
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However, if you have already invested in invercargill then you may be in a position to sit back and take the improved yields as well as some capital growth.
.Hi Tim,
It’s really difficult to 2nd guess what the market will do and when it will do it. Saying that the Australian market is 18 months ahead of NZ does not mean that NZ will directly follow what has happenened here in Aus. I guess what it comes down to is how long you have already owned the properties, and how much they have appreciated in value. If the value has only gone up a bit, maybe it’s worth riding the bumps and holding onto them for another 3-4 years. I personally don’t think the Invercargill market will drop to a point where house values will fall significantly, if at all. When you compare prices in Invercargill to other areas, such as Dunedin, Rotorua, etc.. prices are still relatively cheap. When the market turns, it’s normally the higher end of the market the moves the most.
Regards,
OziHi Agile
If you listen to the ‘experts’ over this side of the Tasman then it seems that prices are going to drop in the near future. Prices are still going up, but slower than before. The BNZ economist even suggested prices will drop 10% over the next 2 years. Interest rates have been going up recently over here, and the speculation is that they will go up more. But I think there is another 6 months or more of reasonable activity to go before it starts to pinch.
But who knows? If I knew what was actually going to happen, I would be a lot richer! But thats all part of the game.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsBelow is an article from last Fridays Southland Times Newspaper regarding the positive future of Invercargill. This in addition to ozi’s post earlier today puts a lot of substance towards a rosy current situation and future.
Feisty city blows away the experts
08 April 2005
By KAREN ARNOLDInvercargill’s future as a stable, healthy community is still on the up, blowing apart the theory of one Australasian population expert.
KPMG consultant Bernard Salt, of Australia, told The Southland Times yesterday the city was continuing on its upward – albeit slow – spiral. It could expect to maintain a stable population unless there was a structural shift in the region’s economic base. “I think you’ve got 50,000 feisty people who don’t give up easily.”
Mr Salt has been studying demographics across Australia and New Zealand since 1989.
About 1999, he suggested Invercargill was one of three Australasian cities that would suffer “significant and sustained” population loss. In the normal lifecycle of a town, it could take up to 50 years before there was a turnaround. It had been affected by a fall in the strength of the agricultural sector, efficiencies at the Tiwai Point aluminium smelter requiring less manpower and changes in meat processing.
Such structural economic changes could “wrong-foot” a town and the situation couldn’t change no matter how good the community leaders were, Mr Salt said. A year later, he noticed a sudden change. “Invercargill went from losing to gaining population. “I have never seen a town go from big-time loser to a winner of any sort.”
Mr Salt was prompted to ask “what the hell was going on?” He found Southern Institute of Technology chief executive Penny Simmonds’ “idea in the shower” to create a zero-free polytechnic was the catalyst, supported by a determined, patriotic and innovative community response.
Invercargill benefited from having community trust funders, which meant the city could manage its own future, he said. It could take its own risks and reap its own rewards. “Australian regions don’t have that. It’s not about looking at copying what Penny Simmonds did but the principle. “The lesson should be Invercargill’s recovery. I still don’t think it’s appreciated as widely as it should be.” Invercargill people were enjoying a positive community.
The injection of youth and vitality encouraged older people into the city and created balance, Mr Salt said. As a result, the population decline had stopped and was “flat-lining”.
He expected it to remain the same, give or take 500 people, unless there was another significant change in the economic base.
Cheers
GeoffBInvercargill could be an interesting case study.
Prices have been going up a lot recently, mainly due to out of town (and out of country) investors. Much like Tokoroa. When the next slump comes, it will be interesting to see if those gains will be sustained, or if they are in for a bigger than average correction.
With the introduction of the zero-fees for students, I think the student population will help to sustain the gains to a certain extent.
Andrew
http://www.rentmaster.co.nz
Software for LandlordsHi all
Andrew don’t compare Tokoroa to Invercargill, there is no comparison. There are some huge things happening for Invercargill that over the next decade will give the city even more growth.
regards westan
We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Hi All
I agree with Westan you can not put Tokoroa and Invercargill in the same context. I now have property in both and I believe Invercargill has a bigger future. I know that Westan is not sourcing property in Invercargill at the moment and has moved off shore, but this does not mean he has abandoned the area.
Invercargill is on the rise and it is still a good place to buy property, there are plenty of good deals if you know what you are doing in the town. After being there a few times now I have met some great people and even a couple of reasonable real estate agents.
You have to be able to sort out the good from the bad and you do really need to get help from someone who is familiar with the city. Buying property off the net is a dangerous business; just ask all the people who have property and no tenants.
Kerwyn.Let me start off by saying i am not trying to be a smart alex but from the time i spent living in Invercargill this is a list of problems it had.
1. Coldest place i have ever lived by a country mile the cold miserable days seem to go on forever.
2.Lack of work the only decent paying work was if you worked for Tiwi smelter.(Comalco has been told by NZ government that it cant have any more power than what it is currently getting therefore ruling out any further expansions.
3. Wages were terrible (my wife worked for a department store over there and the wages were less than half of what she was getting in oz)
4.A large percentage of the locals i worked with were trying to save enough money to move away from there.
5.There are two local gangs that have ongoing disputes.(When we were there one gang member tried to shoot another whilst he was in court on another charge)
This was a while ago now so i am just wondering how and what has changed there to make it a viable long term investment proposition.
Just on more thing the locals my wife and i met there were some of the most friendly and generouous people you could wish to meet. Regards BeanieLive every day like its your last
Hi beanie
those are interesting comments, it sounds like you haven’t been to Invercargill in some time.
1. Yes it is cold its located at the bottom of the south Island and gets very windy. But hey London’s worse and actually closer to the north Pole than Invercargill is to the south. I’m from Australia but I now live at Balclutha about 150km away and i wonder what happened to Summer ??? Remember no one says you have to live there to own properties there ! and 50,000 do live there, the 3rd largest city in the south island.
2. Lack of work ? well that one suprises me as there is a lack of workers. Southland has the lowest unemployment in the country (i think). As far as the smelter goes it one of the largest in the world but you are correct the Governement will not allow more electricity to be used by the smelter. But what if a New Power generator was built- say a Lignite generator ??? what if it was near Invercargill (hint do some research). What if there’s enough lignite to supply a power station for 1,000 years ?? Could this help NZ’s increasing demand for power.
3. You might be right about the wages (all of NZ has lower wages than OZ). But they still have enough to pay their rent !
4. yes lots of people moved from Invercargill during the 90’s, so many that the city was famous for being the fastest declining city in NZ, but the trend has reversed and its now growing again. Its Interesting that people wanted to move away, lots of people i know who live in Invercargill have family living in Perth- the other end of the temperature scale. I have noticed a number of people moving back there after years away from the city. (personally i wouldn’t live in Invercargill i like the warmer climates, so its back to Oz soon for me.)
5. gangs – well Invercargill is about the quietest place in NZ for Gang activity. As far as crime goes its about as safe as it gets, lots of people leave there doors unlocked etc.
You mentioned what has changed the city.
Well things go that bad a few years ago, people were leaving, home prices dropping, that the city decided to do something about it. Under the leadership of Tim Shadbolt an ex Auckland Mayor the city turned itself around. First its Institute of Tafe started an innovative program called Fee free studies this attracted thousands of students. This created a turn around that many who haven’t been to Invercargill in the past few years wouldn’t be aware of. Today the city is moving ahead. New Business are opening and locals have regained their confidence.
Finally its what the future offers that encourages me to continue to invest in Invercargill. On the books are projects which “if” they happen would bring in Billions of investment dollars.Regards westan
We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database
Thanks for the comments Westan, yes you are quite right i havent been to Invercargill for quite a while. Will have to learn a lesson from this one being that i shouldnt let past predjucies influence my view of what is currently happening there.I have certainly got some homework to do on the area now. Regards Beanie
Live every day like its your last
Hi Beanie
If you think Invercargill is cold try living in the North of Russia for 4 months during winter, a nice -36 to -40. We even had a warm spell for a couple of days when it was only -10, had to start peeling the clothes off. Invercargill is paradise compared to that.
If what you say is true Westan than I am glad I listened to you about Invercargill and bought a couple of properties there, thanks for the info.
KerwynHi,
I sure hope that what most of you are saying is good, as we have a couple of units in Invers (I normanlly refer to Invercargill as “Invervegas”)
We brought down there as , at the time most propertys were still cash flow postive, though that seems to have changed & I see now that only the cheaper & in some cases , junk propertys seem to be at the moment & in my view junk is junk in any market, which is a shame as Invervagas “is” going ahead, I was there two days ago for the opening of a new student accomodation building.& what a neat bulding & refit it was
If I compare Invervegas to Dunedin, I think Dunedin is by far the better place for rentals as I have some there as well .
I base this on the number of people who come & look @ the propertys & want them from just one add!!
I have always found the biggest problem (if you can call it that)is deciding who I take on as tenants out of the 10 or more people who ‘want’ the property (thats not includeing the ‘maybes’ that you always get& remember this is from one ad,we always get around 20 people who respond @ any one time, I have never had to advertise a property twice in 9 years, until I brought in Invers!!, its alot harder down there the units I have there is very tidy, infact I would go as far as to say, they dont come much better (infact they cant, im talking new carpets/wallpaper/curtins/paint/new whiteware/gardins professionally maintained etc etc etc)& the rent is not high, infact its cheap !!
So Dunedin is much better in that respect, I would be interested in your comments
maybe the market down there is saturatedI might be way wrong about the place as it certainly has substance (44 thousand people, or is it more?) and I even know people who have moved there. Westan is smart and he loves it. So maybe it’s fantastic, and I am ignorant. It’s a woman’s prerogative to change her mind.
Anyway, I did put out a great deal to our client list in Invercargill, the only one in the last year, for a 15.6 percent return. in a good suburb.
Like I said at the time, for that kind of yield, it all makes sense and I love the place. It’s just that I don’t necessarily want to buy 9’s there for capital gains.As Invercargil investors we must say that what is imprtant is not to put all of your eggs in one basket. Your NZ portfolio should have a balance of high yielding properties (and yes these can be found in Invercargill) and high capital growth properties (in Auckland, Christchurch, Wellington, etc.).
I have to agree with all of Westan’s comments – Invercagill has changed a lot. The biggest problem we have had is with Property Managers who just don’t ‘get it’.
Remember it is a big country town with a countrified mentality and they tend to do things ‘differently’ in Invercargill. So don’t expect big city service or response times because you will be frustrated!
So if you can resolve this issue and you have a good property with little maintenance and good tenants then it’s almost a no brainer and yes, it’s a good place to invest.
Sigrid de Castella & Antony Anderson
http://www.kiwiproperty.biz
New book “The Guide to New Zealand Property Investing – Australian Edition”
Available at our web site along with other NZ Resources for Australian InvestorsHi KiwiProperty
I am looking around Invercargill at the moment – Can you recommend a ‘good’ property manager that you have found in Invercargill?
Invercargill is an interesting place when it comes to investing. Although I now reside south of Auckland (Pukekohe in fact) I’ve previously had the pleasure (and I mean that literally!) of travelling to Invercargill twice a week with one of my prior jobs. Like all towns it has it’s problems, but from my perspective, it’s a great little city with a bright future – much to the hard work of Tim Shadbolt. You need to consider a couple of key factors driving the city’s growth – cheaper rural land prices which a few years ago saw a HUGE number of dairy farmers head south to reduce debt, and increase farm sizes (ie – better returns), and also SIT with the free education. Both of these have lead to a sustained population growth – meaing there should be a reasonable base of tenants. Its fair to say that I agree with a couple of others that we should not compare Invercargill with Tokoroa – two VERY different places, and two VERY different populations. Like all things in life, it’s really over to you to make your own mind up – right now I’m in the middle of closing a 10.4% (aka cash positive deal – so they are still there, and just this morning, I spotted another. My advice – spend a couple of hundred, jump on a plane, and go and see the place for yourself. Good Luck.
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