The average property increase in Auckland since 2011 is 34 percent and homeowners are ‘doing the numbers’ and finding ways to spend up. A new boat, car or bach for Christmas? The problem with these purchases is they are all liabilities that cost you money rather than make you money.
Buying a second home for fun is a better spend than buying a boat or car but it’s still going to cost you each month in loan repayments, rates, maintenance etc.
Incomes are said to be keeping pace with inflation but not a lot more so debt servicing needs serious attention for any purchases that require a loan and other fixed ongoing expenses.
A mortgage broker quoted in an article on NZHerald said:
“The rationale has been that they can’t find anything in the investment market to buy … so they’re now making the decision to do the lifestyle choice and buy a second home.”
Umm they are not looking hard enough. As a property investor I’d wait until I found an investment property if I was deadset on spending the equity. A second home is a liability costing you money whereas an investment property is an ‘investment’ which produces an income to pay the expenses and ideally provide ongoing cashflow and maybe a profit.
It will be interesting to see just how many homeowners do purchase the car, the boat or bach this Christmas.
This blog article was written for PropertyBlogs by Mobilize Mail.