New Zealand is famous for its clean, green environment, with
magnificent mountains
and sparkling waterways. At the same time, New Zealand is
a dynamic first-world society with sophisticated cities and
a vibrant arts and cultural scene. The index of economic freedom
(complied by the Wall St Journal) ranks New Zealand third
out of major OECD nations. This takes into account openness
of trade policy, tax rates, monetary policy, wages, unemployment,
inflation levels, investment flows and regulation.
New Zealand has strong population growth due to its progressive
immigration policy and birth rates. Many parts of the country
are experiencing housing shortages translating into strong
tenant demand and price growth. This trend is expected to
continue with recent population projections by the New Zealand
Department of Statistics (March 2003) forecasting up to 64%
growth over the next 17 years. Auckland city is predicted
to almost double its population in the next 40 years. For
property investors, this represents outstanding potential
growth in demand and return on investment. New Zealand's property
prices are also relatively undervalued compared to its closest
neighbour Australia.
There are many other benefits for investing in New Zealand
including:
Tax friendly nation
New Zealand is an investment friendly country with no stamp
duty, mortgage stamp duty, land tax, property purchase tax,
nor capital gains tax. Some countries (eg. Australia), require
property buyers to pay stamp duty tax, up to 3-4% of the purchase
price!
Australian investors also receive excellent tax incentives
from the Australian Tax department for owning New Zealand
property. If you are on the highest marginal tax rate owning
New Zealand property can provide great tax benefits.
New Zealand also has comparatively high depreciation rates,
making a New Zealand investment property even more tax effective.
A relatively untapped market
New Zealand's property prices are relatively cheaper than
its major trading partners and most OECD countries. Offshore
investment is in its infancy however the level of interest
is increasing as more and more people hear about the fantastic
growth and income opportunities.
High Rental Yields
Most large cities around the world experience solid capital
growth but lack the rental returns. New Zealand boasts rental
yields of 6-10% in its major cities which is fantastic for
an investor seeking a capital growth orientated market whilst
still maintaining a good cash flow position.
