Property investment in New Zealand has consistently attracted both domestic and international buyers to the market. With housing prices gradually falling, there has never been a better time to invest in property.
According to ANZ’s Chief Economist, the property market in New Zealand is ‘cooling down’, as reflected in reducing house prices, which brings back affordability to the market.
However, increasing population growth through migration has been identified as one of the main factors for future price increases. According to recent REINZ figures, January resulted in house sales to a 20 year low. This is believed to be a response to uncertain conditions in the marketplace brought to the fore by ongoing fragility in the economic recovery of the nation, along with uncertainty as to how the proposed property tax changes, if enacted, will affect the New Zealand market. Jane Turner, ASB economist, believes that the lack of clarity in respect to the proposed government tax changes will create a situation where the market is somewhat dulled until May, when the release of the Budget will reveal the full details.
However, trends of increasing perusal of the marketplace and increasing consumer and investor confidence in the property market are creating signals in the investment market that are going against the suggestions made above. In a recent interview with Brendon Skipper, head of Trademe property, he acknowledged that January saw a record number of browsing and enquiries about property, with over 140,000 email enquiries sent to Trademe property listings, 40,000 above the monthly average.
Additionally, New Zealanders are very optimistic about the state of the housing market, according to an ASB survey. The majority of respondents believed that the present was a good time to purchase a property, with nearly half of those surveyed believing that the property values will increase over the following twelve months. In response to this, ASB Chief Economist stated that this response was due to the declining fears of the further market decline.
The New Zealand Government actively promotes property investment by overseas investors. With an immigration policy that encourages skilled migrants to enter the country, soaring costs of property in overseas markets and the attractive lifestyle that is perceived by many foreigners, the attraction of foreign property investment in New Zealand is only set to increase. Whether they are planning to move, or simply developing an international portfolio with a nation that is tax friendly, offers high rental yields, has the benefit of great exchange rates against foreign currency, and has a government that actively encourages overseas investment, the property market will soon heat up.
Create a portfolio or retirement plan now. There has never been a better time.
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