Property Investor Warns Market Growth May Not Continue

James Logan, founder and director of Roofbuddy, a platform connecting homeowners with roofers, cautions against the assumption that property prices will continually rise. As a seasoned property investor and developer, Logan shares insights on the current state of the market and the lessons he has learned throughout his career.

Insights from a Property Veteran

Logan, 39, emphasizes the challenges facing the property market, particularly in New Zealand. He notes that the country is experiencing a “multi-part correction,” where property values are stagnant or declining. Factors contributing to this trend include high inflation, rising unemployment, and a significant drop in overall consumption.

“The underlying value of properties is either stagnant or dropping,” Logan explains. “A fundamental problem with our approach to property is that we had a couple of decades of massive price inflation without substantial improvements in the quality of housing stock.”

Logan’s journey in the property industry began at an early age. He started an air conditioning company in his early 20s and transitioned into property investment and development shortly thereafter. His initial foray into real estate began with a two-bedroom unit in Mt Eden, purchased for $385,000 when he was just 21 years old. He later sold it for approximately $840,000 six years later, a decision he credits with setting the foundation for his investment strategy.

Investment Strategy and Market Reflections

Over the years, Logan and his business partner acquired about 20 investment properties in Dunedin, benefiting from reliable student tenants and strong rental returns. His ventures extend beyond New Zealand; in Indonesia, he developed 15 luxury villas, each costing between $260,000 and $280,000, returning upwards of $100,000 annually through short-term rentals.

Despite his success, Logan acknowledges the shifting dynamics of the property market. “Perhaps we can now move on from the expectation that the property market is going to continue to increase perpetually,” he states, reflecting on the unsustainable growth observed in previous decades.

As he continues to navigate the complexities of the property industry, Logan remains committed to reinvesting profits into growth rather than drawing from the business for personal lifestyle enhancements. “Every single profit dollar has been reinvested in growth,” he asserts, highlighting a philosophy that diverges from many business owners who may prioritize immediate financial gains over long-term strategic development.

Logan currently resides in a rental home in Ōrākei, Auckland, valued at around $3 million. He appreciates the financial sensibility of renting at a rate of approximately 1.7% of the property’s total value. His investments also include land on Great Barrier, where he is constructing a home intended for intergenerational use, promoting an outdoor lifestyle.

As Logan reflects on his career and the state of the property market, his message is clear: a cautious approach to property investment is necessary in the current climate, where expectations of continual growth may no longer hold true.