Low bank interest rates have seen an influx of people switching their money from bank deposits to rental properties.
Barry Joblin of The Professionals Glenbarry Whangarei says as interest rates come down, he has noticed more people starting to put their money into property investments to get the 5% to 6% interest return, plus potential for capital gains.
“It only started in December 2008. But with the banks going down there were about eight or nine people in our office who had traditionally put their money in the bank and they were looking to buy property.”
Joblin adds that Whangarei represents good value for investors and is particularly popular with people of retirement age leaving Auckland for the lifestyle.
In Hamilton, Dennis Coombes, a director of Ray White’s Online Realty has seen a similar trend.
“We’re finding the older people of 60-plus have around $200,000 and they’re scared to leave it in the bank. When you consider the interest rate, less tax and the rate of inflation, you actually have nothing left. People don’t trust the sharemarket or any global markets so there’s a big pull for senior citizens to put their money into real estate. They’re buying a regular income from the rental. That’s happening a lot here,” he says.
In Hawke’s Bay, Mike Hughes of Bayleys says there is sentiment towards bricks and mortar rather than paper money.
But he knows of two people who have transferred their money from the bank to property to keep it safe. One of those is a farmer who has landbanked his money and the other has bought another residential home for himself.
“They’ve seen the depressed market with pressure on price and think property is better than the bank.