Why Should You Invest In New Build Property?
SM Property

May 9, 2023

Investing can be a tricky business, and there’s a million different things you could put your money into, from managed funds to cryptocurrency. But have you ever considered investing in new build property? Here’s some reasons why it might just be the best investment decision you ever make.

Tangible Asset

New builds are a tangible asset (an asset that has physical substance). Unlike some investments, which may be subject to market volatility or even collapse completely, a new build property has inherent value that will never be worth zero. Everyone needs a place to live, so there will always be demand for property.

The Power Of Leverage

Another key benefit of investing in new builds is the power of leverage. Property investment allows you to make returns on borrowed money, which can gain you equity and make it easier to buy more investments.

Over the last 30 years, the average New Zealand property has increased in value by an average of 7.2% per year. This is almost the same return as the S&P 500 over the same period, without even accounting for rental returns or the power of leverage.

Tax Advantages

New builds also have several tax advantages that could save you thousands. Unlike existing builds, you can still claim interest as an expense when investing in new builds (depending on certain criteria) and they’re subject to a 5-year bright line test (whereas existing builds are 10).

Because new builds are, well, new, they typically require far less maintenance than existing builds. This increases your net investment returns and decreases maintenance hassles/costs.

Lower Deposit Requirements

Typically, new build investments will require a 20% deposit. This is half of the 40% required to buy an existing property. This means that you don’t always need to have a huge amount of money saved up to get started with property investment.

All of these benefits mean that investing in new builds can be a path to financial freedom. If you want to start securing your financial future, investing in new build property could be a great start. Chat to the SM Property team here to get started on your investment journey. For more tips and tricks on investing in new builds, visit our Instagram.

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