Is Property Investment Still Worth It?

With the rapid rise in property prices in 2021 and the subsequent interest rate hikes in 2022, it’s easy to understand why people are questioning whether property investment is still worth it.

The headlines are dramatic, the commentary is skeptical, and the social media chatter is relentless. So, is property investment still worth it?

The short answer: Yes, but only if you understand how to make the numbers work for you.

To assess whether property investment remains a smart move, you need to answer three critical questions:

1. What is the cost of owning an investment property?
   

2. Is investing in property still viable when considering return versus cost?
   

3. Can I live with an investment property - financially, emotionally, and strategically?
   

Let’s unpack it.

Breaking Down Property Investment: The Income Angle

Property investment can be sliced into two ways: capital gain and income.

While long-term capital growth grabs headlines, income (or cash flow) is what pays the bills and keeps investors sane in the short term.

The formula is simple: Revenue - Expenses = Cash Flow

For property: Rent - Operating Costs (interest, insurance, rates, body corp, etc.) = Cash Flow

In the current market, due to elevated interest rates, many properties result in negative cash flow, meaning the property costs money to hold. This is what we call the "cost to own."

Use our calculator to see what your investment returns could look like on a property today

Real-World Example: Is It Still Viable?

Let’s put theory into practice with a real-life example:

• Purchase Price: $650,000 (new build, 100% lending)
  

• Weekly Rent: $540
  

• Vacancy Allowance: 2 weeks per year
  

• Annual Costs: $33,600 (including interest, rates, insurance, etc.)
  

Cash Flow Calculation: $540 x 50 weeks = $27,000 in annual rent

$27,000 - $33,600 = -$6,600 annually, or -$127 per week

So, you’re out of pocket $127 a week. Ouch? Maybe not.

You can read more about this in our article specific to the cost of ownership.

Is It Still a Good Investment?

Here’s the part most people miss: It’s not just about the weekly cost. It’s about the return.

If your property appreciates at 5% per year, what does that look like over 10 years?

Property value now	$650,000
Property value in 10 years (at 5% growth)	$1,058,782
Mortgage value in 10 years (assuming interest only)	$650,000
Forecast equity	$408,782

Cost to Own over 10 Years: $127/week x 52 weeks x 10 years = $66,040

Return vs Cost: $408,782 (equity) - $66,040,200 (cost) = $342,742 net gain

That's a huge return on your cost of ownership, without even touching inflation, tax efficiencies, or rental increases.

How to Improve the Numbers Even More

If $127 per week sounds like a lot, good news: there are four proven tweaks to reduce the cost to own and improve cash flow.

1. Discounted Interest Rates

Some banks offer discounted rates on new builds. For example, ANZ currently has a 2.76% discount off its floating rate. Every 1% discount could save you roughly $6,500 per year.

2. Cash-Back at Settlement

Some developers or legal structures allow for a cash-back (e.g. $10,000) at settlement. That can help subsidize the cost of ownership in the first year or two.

3. Revolving Credit Buffer

If no cash-back is available, ask your broker to arrange a revolving credit facility of $10,000. This provides a financial buffer while your rent gradually increases.

4. Mindset Shift: Think Long-Term

This is the most important tweak of all. Property is a long-term game, and every market cycle includes a period where costs feel high and yields feel low. Over time, rents catch up and capital values climb.

Understanding the Property Cycle

We’re at a typical point in the cycle:

• Prices have risen quickly
  

• Rents have lagged (due to fixed-term leases and cautious landlords)
  

• Interest rates have climbed in response to inflation
  

But cycles cycle. Rents will increase. Interest rates will drop. Property values will rise again. The smart investor builds now and benefits later. This is a classic buyer's market.

Your job? Stay in the game long enough to win it.

Final Verdict: Yes, It’s Still Worth It

Property investment remains a viable, strategic, and powerful way to build long-term wealth. The key is understanding how to structure your investment so that you can live with the short-term cost while waiting for the long-term gains.

Forecast equity must outweigh the cost to own. If that equation works, game on.

If you’re unsure about how to make the numbers work in your own situation, talk to an expert who can help you strategise, because with the right knowledge, even in a tough market, opportunity abounds.

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How Can We Help You?

We help Kiwis build wealth through property investment. Our advisors will take the time to understand your individual needs and recommend suitable investment properties to help you build wealth and set up your retirement.

What Does This Look Like?

We use a 3-step process:

1. We start with a Discovery Meeting where we learn about you, your goals, etc., and you learn more about us.

2. This is followed by a Strategy Meeting where we model your retirement plan, understand key investment concepts, and briefly touch on some investment choices.

3. Finally, an Asset Selection Meeting where we discuss investment options in more detail and make any recommended adjustments based on what we now know about you.

Who Are We Right For?

We help people make smart investment choices and set up their futures. From first-time investors to experienced investors, we can cater to a wide range of people and help set up their futures through research-based property investment.

How Much Does It Cost?

Our advice is free to you! If you choose to invest, we’re paid by the property developer. This developer-paid model allows us to provide no-obligation property investment advice in New Zealand, without charging clients directly.

What Do We Do, And What Don't We Do?

What We Do

We offer end-to-end New Zealand property investment advice, helping Kiwi investors grow wealth through smart, data-led decisions. Our focus is on quality new builds in strong locations, tailored to your goals, guided by a team that knows the NZ market inside out.What We Don’t Do

We don’t do KiwiSaver, shares, cryptocurrency, or broad financial planning. Thrive is not a generalist firm. We specialise in property investment in New Zealand because that’s where we deliver the most value. By staying focused, we cut through the noise and help our clients make confident, well-informed property investment decisions.

How Do I Start?

Start the process now by booking a time to talk with our advisor by clicking here.