Mortgage Minute – Capital Gains

TRANSCRIPTION

Capital gains.

When you’re talking about property prices, a lot of people are referring to what the property prices have done in the past, and what are they going to do in the future. And capital gains refers to the increase in the value of the property over time and their predicted increase in the future. So when people are buying it in Auckland, for example, and they’re buying, and the cash flow from the rent is not covering the mortgage even, it’s negatively geared and people are mainly buying based on potential and the capital gains.

If we look at the numbers what we see is, you know, 50, 60 years ago prices for Auckland and Hamilton about the same. They were looking at 100K properties. And what’s happened is that average Auckland price has gone up to a mil, even more now, in Hamilton, the capital gains haven’t been that strong. You know, this is the same for many cities around New Zealand. Auckland seems to be the most popular and this is because of migration, economy, the desirability and internationally.

There are lots of things influencing the capital gain, and the increase in value.