Why Saving Alone Isn’t Enough
Saving money has always been viewed as the prudent path to financial stability. While it is certainly a positive habit, relying solely on savings rarely leads to substantial wealth. Persistently low interest rates and episodes of high inflation make it more challenging to accumulate wealth by simply saving money. In today’s climate, building long-term security demands more than just saving.
The Power of Equity in Property
Equity is where the real financial advantage lies, especially through property investment. Buying a home, particularly a modern new-build, does more than provide shelter or income from renting — it gives you an asset that tends to appreciate over time. Each mortgage payment increases your stake in the property, building your personal wealth rather than paying a landlord or watching savings grow slowly.
Comparing Renting and Buying
Renting and saving might seem like a safe approach, but tenants pay weekly with nothing retained in the end. Even diligent savers face rising house prices, with New Zealand properties still about 16% more expensive than they were in March 2020. Waiting to buy often means needing even more savings for the same property. Each year spent out of the market brings lost opportunities for capital gains and further delays in building equity.
Dunedin: A Unique Opportunity
Dunedin presents a strong case for buyers. As of February 2025, its median house price was about $616,000 — much lower than Auckland ($1,062,000) and Wellington ($791,800) — while demand remains robust. (CoreLogic Home Value Index, 2025) The city’s large student population, with the University of Otago and Otago Polytechnic, and a 10% population growth over the last decade, have kept rental demand high and created a housing shortage.
The Dunedin City Council anticipates the need for approximately 1,500 new homes over the next three years and 4,800 over the next decade, highlighting persistent supply constraints. This means buyers can secure more value for their money in Dunedin, supported by continued growth from students, professionals, and major projects such as the new hospital and infrastructure upgrades.
The Appeal of Townhouses
Townhouses stand out as a practical choice. They are modern, low-maintenance, and energy efficient, and often include peace-of-mind warranties. Unlike older properties, they typically don't have issues such as leaking roofs, outdated heating systems, or compliance problems with healthy home standards. This means more of your investment goes into your asset rather than repairs. Townhouses near amenities and transport also tend to have high tenant demand, helping maintain their value.
Understanding Mortgages as a Financial Tool
Don’t be discouraged by the thought of a mortgage. Not all debt is bad. When managed responsibly, mortgage debt can be an effective way to leverage a bank’s resources for personal wealth growth. You’re not just spending; you’re investing. Each year as a property owner adds to your equity, giving you more options: refinancing for better rates, upgrading or investing further. Renting, in contrast, doesn’t build anything for your future.
Time In the Property Market Beats Timing the Market
Current market conditions have rarely been as favourable for investors and home buyers as they are right now; there is a significant amount of housing stock on the market, lower competition from a smaller pool of active buyers and nationwide housing affordability measures are at levels not seen since 2019. If you are considering entering the market now and fearing that you may overpay for a property or the market may deteriorate further then it is important to focus on the adage “it’s not about timing the market, but about time in the market”.
Since 2000, the market has been subjected to economic slowdowns or recessions in 2001/02, 2008/09, 2015/16 and a global pandemic in 2019/20, but despite these setbacks, between January 2000 and June 2025, the New Zealand property market went up by 373% and the Dunedin property market went up by 478%. This excellent historical performance, despite several periods of tough market conditions, reinforces that adage and emphasises the need to get on the property ladder with a long-term perspective.
Final Thoughts
Saving is still important — for deposits, emergencies, and short-term objectives but relying on savings alone is slow in a fast-paced market. Over time, equity consistently outperforms interest. For those serious about building wealth, ownership is key. Starting with a townhouse in Dunedin could be a smart and achievable first step.
Disclaimer
The information provided here is general in nature and does not constitute financial, investment, or legal advice. Readers are encouraged to seek independent professional advice tailored to their personal circumstances before making any financial decisions. The author does not accept responsibility or liability for any actions taken based on this content.
