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Articles by Matthew Gilligan

Property Market January 2018

AUTHOR: Matthew Gilligan

POSTED: 17 January 2018

Many property investors are wondering what the property market is doing, and we've had several people ask us what our predictions are for the next year or so. Being aware of where we are in the cycle, as well as other factors affecting property, helps investors with their decisions and so I share my opinion below.

Personally, I have cashed up a bunch of problematic houses with less growth potential in the last 90 days. I can only see Auckland softening in the next couple of years, so selling the worst of my portfolio while the market was high seemed to make sense to me last year.

I can't see tight finance, tougher tax rules, reduced investor confidence, banned foreign buyers, and a climate of investor bashing and increasingly negative media being a positive environment for property in the next couple of years. Add to this we were at a cyclical peak in 2017 heading into a well-predicted cyclical downturn for Auckland in 2018, with the rest of the country being typically 1-2 years behind the Auckland cycle.

My plan now is to wait for bargains that suit my strategies, and to buy back in when the Auckland market has softened. Remember that bargains in Auckland will always be bargains, so keep an eye out for people dumping quality assets at discounted prices. In a falling/flat market some people sell at big discounts and such situations present investor opportunity. The key is not to pay retail or buy assets you can't add value to, while the market is flattening. As there is unlikely to be growth, you need to generate instant equity when you buy because the growth is likely 5+ years away.

Looking outside Auckland, I expect that Wellington will benefit from Labour expanding the government footprint, and it's cheap having not grown as much as other centres did during 2013 to 2017. So I think Wellington is a good market to be in over the next few years.

I'm sure there will be other pockets of growth around the country, but residential investment property in Auckland is overcooked and must be flat to declining for at least a few years, if not 4-5 years. After that, rents will rise, household incomes will rise, and what is expensive today will become more affordable as incomes catch up to stalled asset values, and we can thereafter see more growth. But it's 5+ years away.

You can see examples of strategies investors are using at present on our free Property Investment & Education seminar. Or learn how to adjust your strategy throughout the property cycle at our 7-week Property School course.

That's my view.

Request a Meeting

Matthew Gilligan
Managing Director and Property Services Partner

09 522-7955

mg@gra.co.nz

© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015

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