Is it time to Trade up?

The Government through its Kiwibuild policy aims to build 100,000 affordable homes over the next 10 years with at least half of these in the Auckland area. The price in Auckland will be capped at $650,000 for a 3-bedroom property and $600,000 for a 2 bedroom.

These houses are targeted at predominantly first-time buyers to help them get on the property ladder at affordable prices.

However, this is a lot of supply into that section of the market, it has the potential to swamp the lower end and to create a “bubble” in that sector which may result in a fall in prices of existing property or at least severely limit any future capital growth. This is one of the goals of the Kiwibuild policy.

If you purchased your first home 3 to 5 years ago you would have experienced good capital growth and will now have increased levels of equity. The Kiwibuild program will cap further gains. With the property market, at least for now stabilising it may be time to consider selling your current property and purchasing in the next property bracket up, where there is still a shortage of supply, protecting your existing capital gain whilst locking in the prospect of further capital gains.