With the COVID-19 pandemic impacting the property market worldwide, many people are afraid to invest in property due to the unpredictability of the current environment. However, mortgage broker iConsult believes that aspiring New Zealand homeowners should grab this opportunity to climb the property ladder.
Satyan Mehra, iConsult's founder and chief adviser, said Kiwis intending to buy their first home might as well invest in property now as there is never a right time to invest.
“If we're talking about a situation where everyone loses their job, the market crashes, the economy crashes like we've never seen before, and you're forced to sell, well that event can happen any day. Whether that's during a good market or a GFC, bad things can happen at any time,” Mehra said.
“Property is never 100% risk-free, but it's probably the next best thing after cash – some would argue it's even better. So, while it may seem as though there's never a good time to take the leap, we do know that property offers security, and right now, it's also cheaper than ever.”
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Mehra said the benefits of investing in property now rather than later include increased wealth, peace of mind, and cost-efficiency.
“Historical data shows that your property value will rise, therefore creating wealth for yourself. Investing in property will give you security and therefore, will give you peace of mind. This is your property, and no landlord is going to come in and make the decisions,” he said.
“Over the last few years, the mortgage rates have been sitting between 3% and 5%. With the historic low rates, this means you will be paying less on interest costs. Further to this, it means that property ownership today might be cheaper than renting in some cases.”
“For example, if you were to compare buying a $1m home to renting it, assuming you purchased the property with a 20% deposit, the mortgage cost of $800k with interest of $19,920 per annum (based on 2.49% rate), would equate to $383 per week,” Mehra concluded.