- Hi, it's Connie from Prosperity Finance,
sharing the best financial tips
so that you can be more successful
with achieving your financial goals.
Now this time of the year we're all contemplating,
you know, what the year has for us.
So today I have a very special guest, Gary,
who has been on our program in the past
to talk about what he think the 2020 property market
in New Zealand look like,
and also share his great investment strategy,
so help you to purchase a good property
that helps you to grow your wealth.
So without further ado, let's welcome Gary.
Hello, Gary.
- Hello Connie.
- Hi Gary. - Thanks for having me here.
- Thank you, Gary.
Thank you for coming along.
Now, a lot of people know you are famous property coach,
but just in case you know anyone who watching this video
don't know you, can you give us a brief intro
about yourself, please?
- Yeah, sure, I've been in New Zealand
for over 20 years.
Quite an old immigrant now.
And then, yeah, pretty much started as,
my civil engineer career,
you know, was 20 years ago now.
And then I started investing in property in 2010.
You obviously want to achieve financial freedom
so I can quit my job earlier and all that stuff.
And then in 2010 and then the following six years,
I managed to purchase 14 properties.
And now there worth about $10 million.
And in 2013 onwards, I started to help others,
you know, coach other students, etcetera.
Helping them achieve, obviously, financial freedom, as well.
Yeah.
- Oh, great, Gary, that's a great purpose.
And you know, you're not making not only making money
from doing business, but helping people
to grow their wealth as well.
So, good on you
Okay Gary - Well, same as you, too.
(laughing)
- Thank you.
So Gary,
we got a lot of people wondering
what the 2020 New Zealand property market looks like.
So that's why I really want an expert to share
thee views, so can you tell us
about what you think
2020 property market in New Zealand look like?
- 2020, I think it's gonna be an up year.
I think it's gonna improve on 2019.
So 2019, the first half of 2019 obviously
was dominated by capital gains tax
and then, everybody's kind of waiting
and want to see what happens.
What labor will do, and what Winston Peters
will do with the capital gains tax.
And obviously, fortunate enough,
for, you know, a census should prevail, logic prevails
and then they canceled it.
Canceled the capital gains tax proposal.
And then pretty much after that, soon after that,
central banks, reserve bank of New Zealand,
step in and also trying to stimulate the economy.
So really, the first half of 2019 was quite flat.
There were a lot of deals, a lot of good deals to be bought.
And then, pretty much once the capital gains was gone
interest rates start to drop.
I think year-on-year interest rates
have dropped from 4.15, 3.99 beginning of 2019,
to now, 3.39 for one year.
That's like 20% drop in interest rates, right?
So combined with, obviously, no longer capital gains tax,
that the market really started to take off, really.
Well maybe not take off, but strong recovery.
And then, auction success rates for the second half
of the year have, especially in Auckland,
increased from like 20 percent,
now to 60, probably plus, percent.
So that's a major improvement in people's confidence
in the market, and is obviously reflected
in the auction success rates and also on the buoyancy
of the market has come back.
I think 2020 is just a continuation of that.
I think, probably prices, especially in Auckland,
will probably increase by five,
maybe even up to 10 percent, this year.
Yeah so, quite a good year.
- Well that's good to know.
The downturn was only, you know, last two years, so far.
So if we expect some kind of growth,
that's great news for a lot of people.
I used to have a client worry about,
you know, they purchased a property two years ago,
and they dropped the value a little bit on the paper.
So that will be very welcome news for them to hear.
And for people who are looking to buy property
cause they kind of expect, there will be
some capital growths in the near future.
So that's great to hear.
- Yeah. - Okay, Gary,
so, given the interest rate has dropped quite a bit
and also the lending policy
also relaxed a bit,
people have more burrowing capacity now.
And they really can, too, to buy the right property.
But a lot of people have a job and they're not familiar
with property purchase, and property investment.
So when they get a pre-approval they have another problem,
what strategy to use to buy the right property.
So, what's your advice for 2020
for people who are looking to purchase new property?
- I think for 2020, not even just 2020,
I think any time you're in the market,
you got to focus on cash flow.
Especially in main cities.
In 2020, I would advise not to buying in small towns.
The small towns typically are very cyclical.
They're very volatile.
You can have a couple of good years, very short years.
And then followed by really long, stagnant
of, basically prices not going up very much.
I really recommend buying in cities
with at least 100K population.
Obviously, Hamilton, sorry.
Auckland, Hamilton, Tauranga,
Christchurch, Wellington et cetera.
These are the big cities
and it's always gonna have more capital growth.
And it's really important to buy cash for properties
in capital gain cities.
Big cities, but you want to buy,
probably that are returning,
especially in Auckland,
at least five percent, I say.
Four or five percent depending on the area.
Obviously the better the suburb,
the less the cash flow, less it grows you.
But it's important that you got to buy cash
for properties because,
first, you don't need to supplement
your personal income to look after the property.
That's first thing.
The second thing is also in the long run,
cash flow allows you to borrow more money from the banks.
And the more cash flow you have,
the more money you can borrow
and the more properties you can buy.
And then when property prices go up in the long run,
the more properties you have,
the more capital gains you enjoy.
Also, increasing rental income as well.
And that's one of the benefits
of the last ten years was my now,
my 14 properties and I obviously
want to borrow more as well.
- Thank you, Gary.
Yeah, I think a lot of people
focus on, purely on capital growth potential,
but forget about cash flow,
so when they go to the bank, the bank turn them down.
So it's important to keep both going,
especially the cash flow, otherwise you wouldn't even
be able to purchase the property.
But as you said, Gary, it's not easy, you know.
The better area, the less yield,
so it's not easy to get best of both worlds.
But I think you're teaching your students
to add value to the property to actually
increase the yield, is that right?
- Yeah, that's right, yeah. - Yeah, yeah.
- So either adding bedrooms or sometimes do conversions
where you are adding multiple incomes on one title.
Or sometimes splitting to multiple titles, as well.
Obviously, it depends on the kinds
of the student's affordability,
financial situations, things like that.
There's no one strategy that fits all,
but that all strategies always focus on cash flow,
and then capital growth is kinda like second.
- Oh, great.
It sounds like, as if there's
no one-size-fit-all for my client's advice.
So probably investing, actually,
you need to have some good knowledge
to make a good investment.
So you either find a good one,
or if they're too competitive, you can't find one still,
as Gary said, invest in big cities.
But maybe you leverage Gary's knowledge.
His experience,
He is helping students
to purchase right properties
to help you to grow
your property profilo and wealth.
Thank you so much.
And also, thank you for the audience
watching this video.
If you find it useful, please feel free
to subscribe to our YouTube channel.
And also, if you're interested
in getting help from Gary,
his contact details is actually listed
in the video below.
Feel free to have a chat with him
to see how he can help.
Thank you for watching
and thank you for Gary.
We'll see you next time.
Bye, for now.
- Thanks, Connie.
Cheers. - Bye.