Why Invest in New Zealand Real Estate?
The last official census carried out in New Zealand took place in 2006 and although the next census won’t take place until 2016, it’s estimated that the population for New Zealand in 2013 was over 4.4 million.

The New Zealand Government actively encourages overseas investors to invest in New Zealand real estate, with no restrictions on foreign investors (buying or selling) and no capital gains or other taxes.

 

New Zealand has established itself to be an excellent property investment location, and a strong alternative to Australia for international investors. Although famous for its breathtaking scenery and clean and pristine environment, New Zealand is also a dynamic first-world society with sophisticated cities and a vibrant arts and  cultural scene. As a result of the 2011 ‘Doing Business Project’ by the World Bank Group, New Zealand has the No.1 ranking for protecting investors. 

 

The New Zealand property market has an opportunity to benefit from strong national population growth due to New Zealand’s progressive immigration policy and birth rates. Many parts of the country are experiencing housing shortages translating into strong tenant demand and price growth. For property investors, this represents outstanding potential growth in demand and return on investment as there are no taxes on profits, meaning you get what you make, a welcome change to many other countries such as the USA and the UK that are increasing taxes on gains.

 

 

 

 

 

 

 

 

High Rental Yields

New Zealand has rental yields on a world scale, often between 5.5%-8% in many of its major cities. However, this high yield to price ratio is likely to drop between 2014-2016 as prices rise. Rental occupancy rates are also high due to the shortage of new projects since the GFC. (Global Financial Crisis)

 

Low Taxes for Property Investors

New Zealand is a very low taxed country for property investors with no stamp duty when buying or selling, no mortgage stamp duty when taking a loan, no land tax, no property purchase tax, no capital gains tax when selling, and with no restrictions imposed on foreign buyers when buying or selling.This makes it very attractive for investors, as even a 5% capital gain could be equal to up to 10% per year if having to pay tax.

 

New Zealand also has comparatively high depreciation rates, making investment property even more tax effective. The rate of depreciation in New Zealand is four per cent per annum on buildings regardless of their age, and it begins from the date of purchase (the rate of depreciation in Australia is 2.5 per cent starting from the final day of construction).

 

Also you may be able to secure a new property GST free if you are willing to rent it out for 5 years. For specific information on taxation rulings, benefits and liabilities, we would recommend that you consult with an accountant who specialises in overseas investment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A Government That Welcomes Overseas Investment

The New Zealand Government welcomes foreign buyers into its real estate markets, and even allows for a property to be sold GST free if the investors is providing rental accommodation to meet the current shortage for up to 5 years.

 

Market update: 2014

New Zealand’s housing market remains buoyant, amidst strong economic growth. During the year to end-February 2014, the nationwide median house price rose by 8.64% to NZ$415,000 (US$354,547), according to the Real Estate Institute of New Zealand (REINZ).Eleven of the country’s twelve regions had house price rises during the year to February 2014. Canterbury/Westland registered the biggest house price increase, with a 12.4% y-o-y rise in February 2014. It was followed by Auckland (10.7%) and Southland (8.3%).

 

According to the Global Property Guide Auckland has the most expensive housing in the country with an average price of NZ$592,000 (US$506,000) in February 2014, followed by Central Otago Lakes.

 

During the housing boom from 2001 to 2007, house prices rose 123% including 24% in 2003, 12.5% in 2004, 14.5% in 2005, 9.6% in 2006, and 7.7% in 2007.

 

During the Global Financial Crisis house prices started to fall in early 2008, but the decline was much less than in many other countries. During 2008, house prices fell 8.94%.Then in 2009, house prices rebounded by 5.23%. However in 2010, house prices fell again by 1.63%. The housing market then started its full blown recovery in 2011.

 

In February 2014, the total number of dwellings sold in New Zealand stood at 6,125 units, up by 29.8% from the previous month. NZ’s property market is expected to remain strong in 2014 and beyond due to the strong economic growth. 
 

The country needs to build more than 20,000 housing units every year to maintain sufficient housing for the growing population, claim local property analysts. However, the number of dwelling consents was below 20,000 in the past three years. "Residential consents cannot stay this low given ongoing population growth and earthquake rebuilding," said Mark Smith of ANZ Bank.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The smallest sizes of apartment in Auckland earn yields of 6% or above – 6.4% in the case of apartments of 55 square metre (sq. m.), according to the Global Property Guide research conducted last August 2010. In a developed economy like New Zealand’s, a yield above 6% is very good on a world scale. 

 

In Central Auckland, the average weekly market rent rose by 6.9% (y-o-y)

Since the Asian financial crisis, New Zealand has experienced years of unbroken economic growth boosted by strong personal consumption. The economy grew by an average of 3.8% per year from 1999 to 2007.

 

2014 is expected to see New Zealand's strongest economic growth since 2007, with projected GDP growth of 3.3%, led by a surge in household spending, according to the Organisation for Economic Cooperation and Development (OECD). "We think New Zealand will be the rock star economy of 2014. Growth is going to pick up pretty solidly this year," said Paul Bloxham of HSBC.

 

In 2013, the total number of visitor arrivals rose by 6% y-o-y to almost 2.72 million people, according to Statistics New Zealand. Then in February 2014, the total number of visitors increased again by 7.1% from the same period last year, to more than 301,000 people.