Buying & selling property in NZ - and the currency decision

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What is the outlook for the AUD:NZD? A pertinent question don't you think since so many Kiwis are looking to go to Australia? The press are of course trying really hard to convince New Zealanders to stay at home. Just like the churches they are presenting a lot of SCARY!! stories about Kiwis living on the poverty line in Australia.

Just in case anyone has forgotten. Australia is taking NZ's best workers, not its worst. Those on the poverty line are clearly people who didn't have a realistic sense of their own worth. This is not surprising of course. Australia is a competitive market, and NZ's are inclined to lack a good work ethic if they are not accustomed to living in a competitive market. i.e. A person coming from a country town, accustomed to spending 20 minutes talking to others at the local post-office will have an adjustment.

No, if you have useful skills, then you will find a place in Australia. The following chart suggests however that your chance to move your wealth over to Aussieland is quickly disappearing. The NZD seems destined to fall back to 0.68AUD in the next 6 months as the Australian economy regains strength.

NZD doldrums is of course good news for Aussies looking to buy property in NZ. NZ are eager sellers, whether to move to Australia, or because of the rural drift to the cities, or simply because the 'batch' is quickly turning into an investment nightmare. What is the rationale for living in NZ, or having a house here? Well, depending on where you buy, it could be easy an investment or lifestyle property. Land rates are padded with welfare here, i.e. $1800, so its best to factor that in. Retirement probably makes the most sense. There are many motels for sale or lease. My favourite locations are Rotorua, Wanganui and Nelson, and of course Queenstown if money is no issue.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Timing to buy in New Zealand

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Europeans, Americans and Japanese will love Queentown, NZ...well maybe you will hate the fact that there are already a lot of you already here. Its enough to ruin a place. :)

The good news is that you have a good reason to come to the land of 'milk and honey'.....your currencies are being debased faster than you can say 'Holy cow'. This is just one appealing aspect about NZ. It is a relatively hard currency.....and whilst income growth here is sluggish, that will change in i'd say around 5-10 years for a number of reasons related to resource development, but also its services-related potential. Yes, NZ is going to find a place in the business outsourcing arena, though it will have to improve its accent and telephony infrastructure. In the meantime, expect a currency gap to widen with Australia.

NZ does appeal. The population is flat...but that will change. This is why I think buying in 3-5 years time makes a lot of sense. All the better if you can debt leverage the property and perhaps spend your 'quiet' summers near before you retire here. Why? Well, summer is quiet here. You just have to decide if you like winter here. Given you are coming from Europe, Japan or the USA, you will struggle less with that question that if you are coming from Australia.

In 10 years, I think NZ's fortunes will turn around. I expect some major resource developments which are going to see a major change in the terms of trade, business investment, population retention, and currency ascension. Yep, and some government will take all the credit...when it was all me. Yes me. I was the one who pulled the lever first. I'm holding the smoking gun!

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Investment in NZ farming assets

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There was an article in the NZ Herald today highlighting the appeal of NZ farming properties as an investment opportunity. The author questioned why NZ'ers, instead even foreigners, are so interested in NZ rural property when the income is so bad. I makes the case that:

1. Rural properties are capital gains tax free

2. Rural properties have offered an average capital appreciation of 10.5%

There are another two further reasons to think there is even more upside in property:

1. Hedge: Property offers some appeal as protection from currency debasement. Commodities are priced in USDs. Thus if the NZD was debased because of poor government policy, there is a hedge in the sense that your US-denominated income will cover your capital loss.

2. Market access: There is scope for the USA-Japan-EU to eventually drop their agricultural tariffs and subsidies which have penalised NZ, as well as the third world. There is of course a trend towards free trade/trade liberalisation. The question is - how long will this take to occur?

3. Demand: There is a shift in Asian developing countries to meat-rich diets, so that demands more meat and dairy imports from places like NZ. Chinese, Filipinos, Koreans, Japanese, etc want bigger breasts, and to get those they need to drink milk. Of course they are also eating more protein like McDonalds, etc.

4. Investment: There is the opportunity to subdivide rural properties into lifestyle blocks.

A lot of property is no longer appealing for wool growing. There is some interest in these properties for timber-based industries, which are of course low-maintenance industries, and easily contracted out to third parties. There is even the prospect of tax, carbon credits and ancillary opportunities like using the waste products for renewable power generation.

Read more in this article or check out our NZ Property Guide. NZ has the obvious advantage over Australia in several respects:

1. Rainfall in NZ is more reliable

2. The currency is more directly tightened to the agricultural commodities, as opposed to metals and energy. This will not change for the next 10-15 years. NZ will eventually discover oil/gas I suspect.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com