68 | Property investment for wealth Touchstone Homes has been building new family homes in the best subdivisions for 23 years. All homes are professionally managed and maintained. Touchstone Homes T T Kelly Deeks BUILDING New Housing Light Commercial Renovations Maintenance Gas Hot Water Upgrades Water Filters southplumb.co.nz 027 509 0047 Proud to be Associated with Touchstone Homes 03 351 6837 | info@paulmcstaybuilders.co.nz | paulmcstaybuilders.co.nz PAUL McSTAY LTD RESIDENTIAL BUILDERS Working alongside Touchstone Homes, we pride ourselves in helping our clients bring their vision to life and are committed to delivering a high-quality service. Contact us today for your garden maintenance needs. We operate throughout the Waimakariri. www.styxpropertycare.co.nz | 027 567 0016 | styxpropertycare@gmail.com Since 1999, Touchstone Homes Residential Property Investment has been focused on helping Kiwis realise their financial goals by using the trusted and historically successful investment vehicle - residential property. “For the bulk of New Zealanders we meet who are considering property investment, the reality of their superannuation plan falls well short of their needs,” says Touchstone Homes owner Andrew O’Donoghue. “Put simply, the savings required go well beyond their ability to save.” For most New Zealanders, the equity in their own home is costing them thousands in unearned investment income, when it could be the key to opening the door to their financial security. Touchstone Homes has been building new three, four, and five bedroom family homes in Christchurch, strategically located in the best available subdivisions for 23 years. All homes are professionally managed and maintained. “Our straightforward approach deals in the reality that is property investment to create wealth,” Andrew says. “There is a simple rule for property investment – time in the market is more important than timing. To be fully effective, the expectation should be for a 10year investment, to get the best outcome.” For the period December 2010 to December 2020, the median house price in Christchurch went from $363,000 to $565,000, up $55% or $202,000. This was followed by an unprecedented increase in prices for the 2021 period, where the median price rose 39% to $785,000. Over the post Covid boom cycle, Christchurch prices increased less aggressively than in the rest of New Zealand and the city came off what had been a period of low house price growth. “For the region, the bottom of the market is close to now. If timing is your goal, waiting until there are signs of recovery is too late. “When we canvas our clients who purchased during the past 23 years and ask them could they have saved faster than their property investment the answer is a resounding no.” Assuming you can afford to save $1500 per month, after one year you can save $18,000 plus interest. Instead, build a new residential investment property using your current home as security for the bank. Spending $800,000 on the new investment home at 5% capital growth, the value of your home will go up by $40,000 in the first year. “The tenant pays 60% of the outgoings and you 40%. Your costs for the year are $20,956, from which you have received $40,000 in capital growth. You have basically doubled your money.” In terms of timing, Touchstone Homes is now seeing a market adjustment. Just as record low interest rates put the market into hyperdrive, the fastest increase in interest rates in history is slowing it down. The volatility in prices caused by increasing interest rates makes it hard to gauge where the true median price really is. “People want to know where the bottom is, and the uncertainty makes them understandably hesitant. “Our view is that land prices are now being adjusted back by developers in several subdivisions, and building cost increases appear to be slowing as building activity is forecast to slow. The supply issues of the past two years are very much moderating and council consent processing times are reducing significantly. Interest rates are close to their peak, and the slowdown is well advanced.” Touchstone Homes has always promoted new builds over old, and the reasons for this have been constant for 23 years. New homes need less maintenance, and they meet healthy homes standards so no upgrades are needed. Now more than ever, new homes receive better tax treatment, interest may be expensed and the bright line test applies for five rather than 10 years. Building new is based on cost rather than market value, so the cost to build will always be cheaper than buying an existing home. Touchstone Homes targets the mid-market which attracts the best tenants and gives the best results at the time you on sell. “When we canvas our clients who purchased during the past 23 years and ask them could they have saved faster than their property investment the answer is a resounding no.”
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