Investing in New Zealand is encouraged by the New Zealand Government who recognizes the important contribution this makes to the development of our nation.
The same housing shortage causing a boom in the property market is being reflected in a lift in the Rental Market. Vacancy rates have fallen steadily since 2007. Average weekly rents for the 12 months to October 2013 were 3.5 per cent higher year-on-year, while annual median house prices were 11 per cent higher. An extended period of under-building relative to population growth has resulted in pent-up demand for housing and a tight rental market in Auckland. Over the past year (to February 2014), net migration reached a ten-year high. This has immediate implications for housing demand.
In New Zealand there is no stamp duty, no mortgage stamp duty, no land tax and no capital gains tax which makes it a very attractive country to invest in. Stamp duty tax alone can add up to 3-4% of the purchase price in some countries! New Zealand also has comparatively high depreciation rates on fixtures and fittings, making an investment into residential real estate even more tax effective.
Auckland has a massive supply and demand issue with the number of new dwelling consents in the four years to June 2012 averaging just 3750 per year whilst in comparison, over the same period, the estimated number of new households established was around 10,000 a year, driven by stable population growth. This housing shortage has seen the boom in Auckland house prices and will continue for the foreseeable future.
Strong demand in the housing sector is expected to bring strong economic growth and boost regional output, as an upswing in housing construction has significant multiplier effects for broader economic activity and employment. This will provide considerable stimulus to the area and draw further investment from Overseas. With easy access to our Real Estate market and a stable economy, New Zealand is seen as an attractive investment for overseas buyers.