'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.

Monday, November 30, 2009

Travelling from NZ

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It is fair to say that NZ is one of the more remote countries in the world, but it is not without its advantages. My partner put together the following comparison of Around-The-World flights for different countries/airlines, and New Zealand came up one of the best prospects for the countries we surveyed. Here is the list for airfares originating from different countries for 39k miles and 6 continents:
1. Malaysia - USD4,500
2. Thailand - USD4,400
3. United States - USD6,000
4. Australia - USD5,000
5. Philippines - USD5,000
6. New Zealand - USD3,500

If you want to book such flights you can visit the following site.
This is of course good news for people living in NZ wanting to make it a base for travelling around the world.
With respect to direct and indirect routes NZ still rates badly and there are several reasons for this:
1. Auckland is the only international airport offering many destinations
2. Auckland does not have the same number of destinations as some larger international airports
3. Connections to other cities like Sydney are an additional cost - albeit available through a discount airline like Jetstar or Pacific Blue (Virgin Group).
4. New Zealand is a low-traffic market so there is not a lot of competition on many routes.

I do note however that there are some attractive options from NZ:
1. Jetstar have a cheap flight from Auckland to Osaka/Tokyo. Tokyo is a good base to get to other Asian destinations
2. Jetstar to Gold Coast (Qld), then Air Asia to Malaysia

I hope this helps!

Sunday, November 15, 2009

Comparing Australia & NZ

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The decision to live in Australia or NZ is a difficult one for some, and it very much depends on your personal context. Firstly I must say that Australia is a big country so there is a great deal more variety there in terms of climate. In that respect, I don't like NZ can compete with the East & West Coasts of Australia, where you will happily where a t-shirt for 10 mths a year. In NZ I seem to be wearing a jumper for 10mths a year, and I've almost given up hope of going whitewater canoeing without a wet suit.
Those important factors aside, lets look at other considerations:
1. Employment: Unless you can work on the internet or in essential services that NZ has a need for, then Australia offers far better job prospects, a higher standard of living, and greater prospects for getting a job you want. NZ however cannot be ignored.
2. Lifestyle: If you have savings or wealth NZ makes more sense as your wealth will go further, and it has a great life. The people are friendly, but not as aspirational. Its a relaxed, backwards place, and I mean that in a good way. It's quiet, its an adventure. I certainly think the rural setting in NZ is better. Its greener, and there are a number of good size, friendly country towns.
3. Variety: I think Australia offers greater variety, though the problem is you need to travel 1000s of kms to experience it. NZ is pretty homogenous English-type culture. Its basically city-country divide.
4. Climate: NZ is wet and windy. We find it mostly rains during the day, though its hard to plan. Australia is far more predictable, and just has a fresh breeze, which offers good relief from a hot sun. Australia is dry heat except for north of Brisbane. Its hard to enjoy water sports in NZ because you will need a wet suit. Australia has bad droughts, but its great for water sports.
5. Economy: Australia is still the mineral and food basket for the world. Over $50 billion of investment in mining & energy projects in the next few years will only increase its standing. Expect this to have an impact on local values. If you are aspirational, its the place to be. If you want the quiet life, try NZ or Tasmania (Australian island).
6. Cost of living: Goods in NZ are a little bit cheaper than Australia, except for processed foods. Australia is cheaper in terms of purchasing power. I find fresh produce including meat better quality in Australia. NZ is probably exporting its best.
7. Activities: If you like wining & dining then Australian cities are better than NZ cities, though NZ country towns are more cosmopolitan. Sporting activities in Australia & NZ are comparable.
8. Services: Both countries are similar in this respect.
9. Transport: Its pretty easy to get around in both countries, though speed cameras and police in Australia are more 'oppressive', and the long distances are a turn off. The flipside is that its a hassle and expense crossing the Cook Strait in NZ. It really divides the country. No prospect of a tunnel in this case.
10. Isolation: NZ is much more isolated, and its more expensive to fly to the rest of the world.
11. Nature: NZ is famous for its geographic wonders. Australia has just as many, the difference is that in NZ they can be viewed in 10 days on a fly & drive, whereas in Australia, you would need a 3-6 month trip covering 30,000 kms.

Here is a sample of NZ's natural wonders....the seal colony of Kaikoura, South Island.

NZ property still makes sense for some

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For Americans the price of property in NZ is looking rather expensive. For most others, the price is still cheap since most currencies have rallied strongly against the USD. Consider that the USD is at a 10-year low to the Yen, and a post-recession low for most other currencies. The implication is that NZ still makes a lot of sense for foreigners. The great tax concessions for property in NZ are still in place, and current expectations suggest a tax on property is only likely to apply to investment property. NZ has one of the most generous taxation policies on property in the world. (see previous posts).
NZ property is of course still expensive. There are those looking at current rises in prices and suggesting prices have bottomed. I would caution that we have yet to see any significant increases in inflation (i.e. interest rates), so highly indebted NZ households have yet to feel the full weight of home affordability pressures.
The implication is that there will be good buying ahead for NZ investors, so come patience is required. There is still low-priced properties you can buy if you are looking at lifestyle properties in rural towns. You can still buy houses for as little as $NZ60K in some areas of NZ.

Having just toured some people around NZ I can assure you the place is as beautiful as ever. There has been a lot of rural development over the last 10 years. The new places I'd be looking at are:
1. Wanganui
2. Oamaru-Palmerston
3. North coastline of Christchurch
4. Te Anau
5. Whakatane

Americans of course do not need to weight too much longer. I think you can expect a strong USD policy in future in order to build savings, just as Clinton did after Reagan. I would expect some shift to energy taxes as well. This makes a lot of sense in a country which is primarily a service economy, or a high value-add. It is a big country though, so expect an impact to non-discretionary spending as well. There should also be some dilution of the currency as well. This is so-called 'balanced monetary policy'. Other countries will be doing similar. Though I would expect a strong USD policy in future.

The implication is that Americans can still look at buying in NZ, but they should get a loan if they qualify and transfer their wealth later when the USD recovers. I would expect the AUD to pull away from the NZD in coming years due to the strong energy & mineral sectors there. The flipside is that inflation should keep personal spending at bay in Australia, as household debt payments rise. So I'm expecting the AUD (which currently is 20% stronger than the NZD) to increase the premium over the NZD in coming years.

Factors which may change this prospect would be the discovery of large oil & gas reserves in NZ, or strong economic reform. NZ really needs to stimulate higher value (non-food) exports. Historically it has done a bad job of that, and its savings rate is hopeless.

Wednesday, November 11, 2009

Places to live in NZ - the North Island

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Recently I have been tripping around the North Island as well. I am delighted to tell you that I think you could find a great many places which you might appreciate as places to live. Personal tastes will differ, but in terms of basic amenities, you might want to consider the following places:
1. Wanganui: This city has an undeserved reputation for its gang activity. I have lived in Wanganui for a year now and I find my neighbour's friendly and quiet. We heard verbal abuse on the street for the first time last night. We have public housing at the end of our street, and there has been some isolated gang incidents over a year ago, which resulted in a drive-by shooting. But essentially its a peaceful place. Yet this city has a bad reputation in NZ as a gang centre. It is a low-income city, though it also has lovely parks, a good beach, good services, a good climate, friendly people, and is well-positioned to provide access to the rest of the North Island, as well as for tours of the South Island. Property is cheap. Skiing is just 90 minutes away.

2. Stratford is a nice town near New Plymouth city. It is an inland town, though one might want to worry about being down-wind from Mt Egmont volcano. Perhaps not the most active volcano, so not too much to worry about. The Taranaki region appeals to many retirees. There are many lifestyle blocks around this area.

3. Whakatane: I liked this town because it offers good access to the Bay of Plenty coast and Gisborne. It is a reasonable size town with ok beaches, services, and not too far from Auckland.

4. Napier/Hastings: This area, like New Plymouth, attracts a lot of retirees, so there are a lot of lifestyle properties, and property prices are generally higher. The climate is more pleasant on the East coast, though sparingly so. The sea is still cold most of the time, and its still windy. The fact that there are two significant sized cities together appeals, even if its remote from Wellington and Auckland. A lot of wineries and fruit growing, and good services.

5. Lower Hutt: I like the idea of being on the coast, but if one must be inland, than the proximity of Lower Hutt makes this area a good choice. It has a walking/bike track along the river into Wellington, which appeals to me, as well as a railway connection, even though traffic is not so bad.
6. Whangerei: I have not been to this city before, and not to the region for a long time. Northland though is the northern-most part of NZ, and thus arguably the mildest climate in NZ. Its close to Auckland, but it does not have good access to the rest of the island.

I retain Wanganui as a preference as a place to live on the North Island. I would not be looking to buy property here for another 2 years until interest rates bite, but thereafter it will be a good place to buy in capital growth areas. These areas currently have too high property prices attached to them. No pain has yet to be applied in the recession because of government bail-outs. The pain will come in the form of higher inflation and interest rates. This allows the government to evade responsibility for its monetary manipulation. In any case, Wanganui is a nice place to live, and in 2-3 years I'd look at other places as lifestyle+investment choices if you are so motivated. I see no great growth in Wanganui unless there is a jobs stimulus in NZ. The culture seems more lifestyle orientated.

Tuesday, November 10, 2009

Places to live in NZ - the South Island

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We just returned from a week trip around the South Island of NZ. The trip started in Palmerston where we bought a 2nd hand 1997 Mitsubishi Carisma for just $3000. Second hand cars are very cheap in NZ. There is no reason to buy on TradeMe, from a car dealer or new given the plethora of quality Japanese and business cars on sale through auction.
We were a party of four. We tended to stay at motor lodges in places such as St Arnold, Frans Joseph Glacier, Te Anau, Dunedin and Kaikoura. Our trip started by taking on the West Coast first.

I find it difficult to decide between the North or South Island. The divide between them is unfortunate. It cost us $650 to take 4 people and a vehicle on a return trip across the Cook Strait. The South Island is a little colder, but the nature is more impressive. If your house is well-insulated its probably not an issue. Its not like you can swim at the beach elsewhere.

I am a fan on rural living, though I do appreciate reasonable accesses to services; at least those provided by a town of 40,000+ people. After reviewing the locations, I must say I could live in a number of places:
1. Murchison, NZ: This town has a lot of outdoor activities though its a little remote.
2. Haast, NZ: This is attractive coastline but its very wet and very remote. Great for people who want to catch and grow their own food. Few people live on this coast, and most people are international tourists passing through.
3. Te Anau: This is a small town, but its growing. It has good access to some large towns, it is not a full service service, but it can address most needs. It has good provisions for recreation and basic community services like groceries, libraries, etc. Years ago I liked Wanaka, but property prices there are high, so Te Anau makes more sense. Not far from Queenstown too. The satellite town of Manapouri is another option for cheaper property.
4. Oamaru: This is a regional town which services the inland irrigation communities. The port is no longer used but this town has character. The beaches are not so great in Oamaru, but head a few kms south to Palmerston, and there are good pickings.
5. North of Christchurch: I did not like Christchurch much, but there are some nice surburbs near the beach to the north of Christchurch, and they are just 30mins from the city if you want access for work or services.

'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.

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