Investing in property has always been a popular way to grow wealth, especially in the New Zealand context. While buying an older property may seem like a more cost-effective choice at first, there are several compelling reasons why investing in new properties can be a smarter long-term investment strategy.
1. Lower Maintenance Costs
One of the main advantages of buying a new property is the lower maintenance costs compared to an older property. New properties come with modern and efficient systems such as plumbing, electrical wiring, and heating systems, which require less maintenance and repairs. This translates to lower costs for investors and fewer headaches associated with unexpected breakdowns or repairs.
2. High Energy Efficiency
New properties are built with the latest technology and materials, making them more energy-efficient than older properties. This not only benefits the environment but also helps save on utility costs. With rising energy costs, having an energy-efficient property can be a significant advantage in the long run.
3. Modern Design and Technology
New properties are designed with modern layouts and amenities that cater to the needs of today's tenants and buyers. These designs often include open-plan living areas, storage space, and updated appliances –which can also help command higher rental or resale prices, increasing potential returns for investors.
4. Attract Better Tenants and Buyers
New properties tend to attract higher-quality tenants who are willing to pay a premium for the features and benefits of these properties. These tenants often stay longer, reducing vacancy rates and providing a stable rental income for investors. Additionally, new properties are more appealing to buyers looking for a move-in ready home, making them easier to sell at a higher price.
5. Potential for Higher Returns
Investing in new properties also has the potential for higher returns compared to older properties. With lower maintenance costs, energy savings, and better tenants, new properties can generate a higher rental income for investors. Moreover, the resale value of a new property is likely to increase over time, providing investors with a significant return on their investment.
6. Government and Reserve Bank Exemptions and Incentives
The New Zealand government has introduced various exemptions and incentives to encourage investment in new properties. These include tax exemptions for newly built homes under certain conditions, as well as low deposit requirements for first-time homebuyers. Additionally, the Reserve Bank of New Zealand has exempted newly built homes from the Loan-to-Value Ratio (LVR) restrictions and Debt to Income Restrictions (DTI’s) making it easier for investors to finance their purchase.
7. Financial Analysis of Old Vs New
Many investors may be hesitant to buy new properties due to the higher upfront costs compared to older properties. However, a financial analysis often shows that investing in a new property can be more cost-effective in the long run. With lower maintenance costs, energy savings, and potential for higher returns, new properties often prove to be a better investment option.
Investing in property is a significant decision that requires careful consideration. While buying an older property may seem like the more affordable choice at first, it's essential to consider the long-term benefits of investing in a new property. Choose wisely, invest smartly, and reap the rewards in the long run! So don't miss out on this opportunity and make a smart choice by considering new properties for your next investment.
If you are an equiti Affiliate Adviser, share this article with your clients to help them move quickly on their purchases. If you are a buyer looking to invest, reach out to your mortgage adviser to sort out your financing or contact equiti directly for guidance on properties that meet your needs.