Property a strong investment: RBNZ
It comes after a report from Camelot Financial Group, which said property investor should consider shares for better returns. Its findings were heavily criticised – partly because the data did not take into account income from rent.
The RBNZ report used estimates of rental returns and the costs associated with property investment. It estimated that the cost of owning an investment property was about 2% of the purchase price, once costs such as insurance, rates and landlords’ time were taken into account.
Between 1989 and 2011, New Zealand investors got the best returns from investment in farms (11.9%), followed by residential property (10.2%). Domestic shares offered a 7.2% return and unhedged international shares 4.9%.
“On our estimates, property investment in aggregate generate d particularly high returns over the relatively short period from 1989 to 2011. Financial assets, on the other hand, performed less well.”
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