'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.


Sunday, November 15, 2009

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.


'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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