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Investing in New is the grass 40
Property | international opportunities
Zealand —
greener?
The advantages of investing in New Zealand are clear:
no stamp duty, strong rental demand and enormous
potential for capital growth. But how easy is it to buy
property in New Zealand? And is it worth the hassle of
managing a foreign property?
N
ew Zealand offers an attractive
lifestyle, with clean air, closeknit communities and thriving
metropolitan centres set against a
backdrop of sprawling landscapes.
With a growing population and
increasing rental demand, the country
is attracting Australian investors in
droves; in regional areas, at least,
Australians are proving to be the
dominant force in the property market.
“We had a number of Australian
investors, when the market was down
six or seven months ago, coming into
the market and buying in our provincial
towns,” says Murray Cleland, president
of the Real Estate Institute of New
Zealand (REINZ).
“Now that values have shot up, that
activity has flattened off a bit, but I
imagine the investors that got in there
earlier will be making some good
capital gains if they chose to sell now.”
1996). According to the New Zealand
Property Investors Federation,
around 170,000 investors own 400,000
of these properties.
Unemployment rates are steady
at a low 3.8%, which, together with
strong domestic demand and foreign
investment, has been underpinning a
strong economy.
The Reserve Bank of New Zealand is
increasing cash rates to try and dampen
growth – most recently, and largely
unexpectedly, in June this year – but it
has had little effect so far.
“I think it’s too early to see the effect
of the interest rate rises we’ve had
this year,” Cleland says. “The housing
market in New Zealand traditionally
slows through the winter period, but
I think in the next month or two we
will start to see the real effects of these
interest rate rises.”
About New Zealand
According to REINZ, median property
prices have more than doubled
nationally in the last decade, climbing
steadily from just NZ$164,000 in May
1997 to NZ$350,000 in May this year.
Statistics NZ estimates that there are
4.18 million people living in New
Zealand, in approximately 1.47 million
residential dwellings (up from 1.27m in
Strong growth
41
Property | international opportunities
nth s
2 mo 7
1
e
h
In t
y 200
to Ma on prices
y
ng t
Welli shot up b
e
v
a
h
13.3%
Cleland says that property values
are on the increase across the board in
New Zealand, with national property
prices reaching a “milestone” median of
NZ$350,000 in May 2007.
“The housing market is strong
because we’ve high net immigration,
good job security, easy access to
finance, and the costs of building new
houses and acquiring the land for them
have increased markedly in recent
years,” Cleland says.
With property values rising,
Cleland believes that home ownership
is becoming “an increasingly
remote prospect” for many “middle”
New Zealanders.
“The need for investors to invest
in rental properties has never been
greater,” Cleland says.
Hot spots
ANZ monitors the supply-demand
balance within the New Zealand
property market by analysing the number
of available properties and the number
of property sales in a region against the
population growth of that area.
Statistics released by ANZ on May
27 reveal that Auckland and Wellington
are currently the nation’s metropolitan
hot spots, showing clear excess demand
relative to supply. They also reveal
that the majority of other regions
throughout the country are showing
early signs of a market that is set to
move in favour of buyers.
42
“We’re seeing in our figures that about
50% of markets are going up and 50%
are slightly decreasing,” says Cleland.
However, Blue Hancock from
Quotable Value (QV), New Zealand’s
largest property valuer, says that despite
some expectations that property prices
may level off, the overall market has
“continued to strengthen”.
“Sale prices in the main urban
areas keep rising, driven by significant
activity in the lower-value localities,”
says Hancock. “Although immigration
appears to be slowing, high levels of
employment continue to contribute to
sale price increases.”
In May, QV reported growth in
national property values of 11.1% in
the previous year, calculated over the
three months ending May 2007, in
comparison to the three-month period
ending May 2006.
Hamilton, a 90-minute drive south
of Auckland, has shown very strong
growth of 11.8% and, on the South
Island, property values in Christchurch
and Dunedin have increased 12.4% and
8.7% respectively.
In Wellington city, where property
prices have shot up by 13.3% in the 12
months to May 2007, “growth has been
very strong,” says Cleland.
These upward trends are also
reflected in the provincial cities, with
Wanganui (14.1%), Nelson (12.3%),
New Plymouth (11.3%) and Tauranga
(6.7%) all on the rise.
“But probably the star performer has
been the Southland region, where we’ve
seen huge increases of 36%,” Cleland
says, referring to REINZ figures that
reveal property values in the region
jumped from NZ$130,000 in May 2006
to NZ$177,000 in May 2007.
“But probably the star performer has been
the Southland region, where we’ve seen
huge increases of 36%”
The residential property market has
remained buoyant in most of the main
cities, with Auckland city’s property
values up by 7.5%, QV reports, and,
according to Statistics NZ, the average
weekly rental was NZ$275 in 2006,
– significantly above the national median
weekly rent of NZ$201 per week.
Cleland says the provincial and
regional areas of New Zealand are
experiencing a period of strong
economic growth and development,
and is now “leading the residential
house price growth tables”.
Don Nicolussi, director of property
investment strategist Cashflow
Property | international opportunities
Properties, says there are excellent
investment opportunities available
to those who are willing to look in
regional locations.
“We try to focus on regions with
strong economic fundamentals,” says
Nicolussi. “We live in Invercargill,
and we’re surrounded by some great
opportunities. Annualised capital
growth for Invercargill was around 25%
in the past 12 months and there’s no
sign of a slow-down.”
Median property
have more than doubprledices
nationally in the last decade!
Investing in Invercargill
Invercargill, New Zealand’s southernmost town, is the commercial hub of
the agricultural region Southland. In
the growing regional city, population
50,000, investors can still access genuine
cash-flow positive opportunities.
“Even though there has been
significant growth in property here
in New Zealand, there’re still plenty
of opportunities available, such as in
Invercargill,” says Nicolussi. “Rental
yields are a lot higher than in Australia
at the moment.”
A two-bedroom unit in the city
centre is currently on the market for
NZ$95,000 and a three-bedroom house
in tidy condition is NZ$160,000. Just a
20-minute drive south of Invercargill,
a three-bedroom house is asking
NZ$101,000, while a two-and-a-halfbedroom house in nearby Bluff will set
you back just NZ$86,000 – with a rental
assessment of NZ$140 per week.
Property values in Invercargill are
sharply moving upwards after the town
fought back from a declining population
in the 1990s and transformed itself,
using innovative ideas and community
funding to attract residents and
visitors to the city. “In the early 1990s,
Invercargill had the highest rate of
population decline of any city in
New Zealand or Australia,” says Tim
Shadbolt, Mayor of Invercargill.
In the 1960s, Keith Richards of The
Rolling Stones made the infamous
comment, when passing through
Invercargill, that it was the “arsehole
of the world”. Shadbolt, however, has
employed drastic measures to reverse
the negative view of the region.
The combined coffers of the
Invercargill City Council, the
Invercargill Licensing Trust and the
Community Trust of Southland
unlocked an “unprecedented,
incredibly high level of community
wealth”, Shadbolt says, and the
$
Exchange rate
The Australian dollar is currently
worth NZ$1.1043*, which
effectively gives you a 10%
discount when purchasing a
property in New Zealand. Keep
in mind, however, that your
investment is vulnerable to dollar
fluctuations – so if the Kiwi dollar
weakens, so does the effective
value of your property. Visit the
Reserve Bank of Australia website
(www.rba.gov.au) to access up-todate currency rates.
*Source: Reserve Bank of Australia as at 10 July, 2007
43
Property | international opportunities
s are land.
e
s
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p
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e
n
io
it
is
u
q
Ac lower in New Zea ee, no
muche’s no establishment f tgage
Thercation fee and no mor
appli p duty!
stam
Mortgage rates
unique, integrated structure of
Invercargill’s “Big Three” has since
been instrumental in “everything that’s
happened in this city”.
The Southern Institute of
Technology (SIT) began offering free
tertiary education to New Zealand
citizens under their Zero Fees scheme
in 2001, boosting student numbers
from around 1,400 in 2000 to 4,500
in 2004. It has been a huge drawcard
for Invercargill that, due to funding
provided by the Big Three, no other
education provider in New Zealand
could match.
“The zero-fee tertiary education
scheme brings about 4,000 students
– and potential tenants – to the city each
year,” says Nicolussi.
With the city’s investment in topnotch facilities, such as the world-class
Splash Palace aquatic centre in 1997,
Southland Stadium in 2000, the recent
NZ$16m Civic Theatre upgrade
and completion of the final stage of
the NZ$9.5m Rugby Park expected
this year, Invercargill now has more
resources and facilities than any other
town of its size in the country.
KPMG Australasian demographer
Bernard Salt lauds Invercargill as a
unique success story, being the only
Australasian local authority area in his
27 years of tracking population trends
44
that he has seen reverse a negative
population trend.
And, according to Nicolussi, the
growth is set to continue. “A New
Zealand company is currently drilling
for oil just outside town, and the
tenders for drilling rights in the south
sea basin just off the coast near Bluff are
soon to be announced,” says Nicolussi.
“The Invercargill property market has
just really started to boom.”
The buying process
Although New Zealand is a foreign
country, similar legal, banking and
regulatory environments allow
Australians to invest in property
without too much trouble.
Most Australian financial institutions
are reluctant to let you borrow against
a New Zealand property, although
there are some Australian lenders and
banks – particularly those with partner
companies in New Zealand – who may
be willing to finance your purchase.
However, it is relatively easy to
secure finance with one of the New
Zealand banks, says mortgage broker
Mary O’Brien from New Zealand
Mortgage Solutions.
She warns that investors should protect
themselves by finding a broker that
understands the state laws in Australia
and applicable New Zealand laws.
Current loan interest rates are
comparatively unappealing, with
several recent rate rises – the most
recent in June – forcing variable
mortgage rates up around 10%.
New Zealand’s Official Cash Rate
(OCR) of 8% is the highest in the
developed world.
“Interest rates in NZ are really bad
at the moment – they’re the worst
they’ve been in many, many years,”
says mortgage broker Mary O’Brien,
who specialises in New Zealand
lending. Because interest rates are
generally more volatile in NZ than in
Australia, O’Brien recommends that
people “fix the majority of their loan,
so they know where they stand”.
Current rates stand at:
1-year fixed
9.3%
2-year fixed
8.8%
3-year fixed
8.15%
4-year fixed 9.05%
5-year fixed
8.9%
Variable 9.9–10.4%
Source: NZ Mortgage Solutions – current as at 13 June 2007
Bang for your buck
Property | international opportunities
Auckland
With 1.25 million residents in the greater Auckland area, it is the largest city in New
Zealand. Auckland City Council reports that the population growth rate of 2.6% per
year in Auckland is well ahead of the national average of 1.8%, making Auckland one
of New Zealand’s fastest-growing cities. New Zealand valuation expert Quotable Value
(QV) reports an average sale price for Auckland of $484,739 in April 2007, with average
capital growth in the three months to April 9.5% higher than the same period last year.
QV Auckland’s Glenda Whitehead says: “Our valuers report stronger growth within the
newly established suburbs such as Dannemora and Flat Bush”.
$200,000 will buy a one-bedroom,

one-bathroom city apartment with a
car space
$500,000 will buy a four-bedroom,

two-bathroom house at Addison, 30 mins
south of Auckland CBD
$1m will buy a property that is close to the

CBD and local schools, returning $800–950
per week in rent
Wellington
According to QV, residential property values in New Zealand’s capital city
region grew by 15.1% to an average of $423,940 in the past 12 months,
calculated over the three months ending May 2007 and compared to the same
period in 2006. Statistics NZ reports that the median weekly rent in Wellington
in 2006 was $211.
Max Meyers of QV Wellington says that although there are “some signs of
a typical seasonal slow-down in the market”, with a lower sales volume and a
slightly longer time to sell, property values and sale prices are still growing at a
very healthy rate. “The residential market in Wellington remains buoyant, with
annual growth recorded at higher levels than the national average and the
Auckland region,” Meyers says.
$200,000 will buy a city

apartment with one or two
bedrooms
$500,000 will buy a hillside

home with views of the city
$1m will buy a house on

a large block of land in
one of Wellington’s best
neighbourhoods
Area
National
Median sale
price ($NZ)
Property value growth
12 months to May 2007
$372,552
+ 11.3%
North Island
Auckland region
$484,739
+ 9.5%
Hamilton
$341,466
+ 11.8%
Tauranga
$417,100
+ 6.7%
Rotorua
$260,194
+ 11.3%
Palmerston North
$288,644
+ 11.3%
Napier
$330,341
+ 1.1%
Hastings
$303,387
+ 4.6%
Wellington region
$423,940
+ 15.1%
Nelson
$352,438
+ 12.3%
Christchurch
$349,932
+ 12.4%
Queenstown Lakes
$616,026
+ 9.9%
Dunedin
$262,337
+ 8.7%
Invercargill
$177,637
+ 24.2%
Christchurch
Christchurch City Council estimated the city’s population at around 360,500 in
2006, up from 325,250 in 1996. This picturesque city, which, in 2002, officially
declared itself a “Peace City” – to celebrate its historic links to the peace
movement – has experienced unprecedented growth in recent months.
According to QV’s May 2007 statistics, property values in Christchurch city
increased by 12.4% in 12 months (calculated over the three months ending May
2007 in comparison to the same period last year). The city’s average sale price for
this period was $349,932.
“May was the fifth consecutive month that the growth in property values has
been higher than the previous month,” says QV Christchurch’s Mark Dow.
“The eastern suburbs within Christchurch have experienced the greatest annual
growth at 14.1%, and the lower priced properties are currently driving a lot of the
activity. Well-priced properties and quality homes are still in demand,” he says.
$200,000 will buy a two-bedroom

South Island
apartment, located minutes from the
Christchurch CBD
$500,000 will buy a solid four-bedroom

house in good condition
$1m will buy a trendy hillside manor with

views of Christchurch
45
Property | international opportunities
th
rowrgill
g
l
a rca 2
1
p it
Ca Inve past ound
r
fo th e a s a r
in s w
nth
mo
25%
“In New Zealand, different laws
and rules apply. For example, you don’t
have to give comparison rates,” O’Brien
explains, “but I always make sure I give
this to Australian buyers, anyway.”
O’Brien says the New Zealand
lenders she deals with regularly will
lend up to 80% of the value of the
property and some will go up to 90%.
“Once you’re pre-approved for
finance and you’ve found the property
you’re interested in, I recommend
that clients fly to the location for a
long weekend to personally look at the
properties,” O’Brien says.
“When you’re over there, you can
then open a bank account and meet
your bank manager, and it’s an easy
process from there on … Approvals can
be very quick, even half a day, especially
if you’re an existing client.”
Finding a reputable lawyer in New
Zealand is crucial, as the solicitor will
manage the transfer of title process and
remain largely involved throughout the
settlement process.
Real life
Hooked on
cash flow
Katherine Mitchell, 27, is a team manager for a Londonbased internet company. She owns two properties in
Invercargill, on the South Island of New Zealand.
Three-bedroom house with
sleep-out on 350m2 land
Georgetown, Invercargill
Purchased: Dec 2006
Paid: NZ$140,000
Value: NZ$160,000
46
Two-bedroom,
one-bathroom house
Strathern, Invercargill
Purchased: Jan 2006
Paid: NZ$85,500
Value: NZ$116,000
The solicitor will also arrange for
the preparation of a land information
memorandum (LIM), which is an
overview of the property from the local
council’s perspective.
After lenders send the mortgage and
loan documents to the New Zealand
solicitor, they then courier them to
Australia. Once the Australian property
buyer signs the documents, settlement
can proceed as soon as the documents
have been sent back as, unlike in
Australia where property contracts have
“I’m a New Zealand citizen, and as I eventually want to settle back there, I
decided that it was the best place for me to invest long term.”
Katherine purchased a property in Sydney while living there in 2005,
and used the equity created from renovations on this property to start her
property investments in New Zealand.
“I talked to my parents, who had invested in the North Island, and they
were able to advise me on the purchasing process in New Zealand.
“I went through a buyers agent, Cashflow Properties. The photos they
provided were far better than anything a real estate agent would have
done, as they looked at the house as a whole and not just the pretty bits.”
Katherine went to purchase her first New Zealand property in Invercargill
with a budget of up to NZ$100,000. The free study program available at the
Southland Institute of Technology, and the number of industries and large
retail chains in the city were the driving factors behind her investment decision.
“I viewed my first New Zealand property on the day of settlement – I had
to sign some legal documents that may have taken too long to get to me, so I
decided to view the property and sign the documents in one trip,” she says.
When tenants moved in, Katherine says they looked after the property, but
would fall behind in their rent constantly and she only discovered this when
the amount credited to her bank account seemed lower than normal.
“Because I live on the other side of the world, the time differences for
contacting people during business hours can be difficult. Luckily, I now
have an excellent property manager,” says Katherine.
Due to the success of her first New Zealand property Katherine
purchased a second property in the same city. “I have not yet decided
what my next investment will be, but it will still be in Invercargill. I have two
cash-flow positive properties that have also increased in capital value since
purchasing them, and I aim to add another investment property each year.”
Real life
Taking the
plunge
a fixed settlement date, the NZ solicitor
can settle the transaction “any time he
or she likes”, says O’Brien.
“The solicitor decides when you
settle – it can be within 24 hours,”
says O’Brien. “The average is about
four weeks, but it depends on the
vendor. Many times I’ve had clients
with coastal properties that are being
subdivided and it can be 12 months
just for title transfer.”
Acquisition costs
Acquisition expenses are generally
much lower in New Zealand than in
Australia. “There’s no establishment
fee, no application fee and no mortgage
stamp duty, so the entry costs are usually
around NZ$1,000, including legal fees
and title registrations,” O’Brien says.
“Often banks will even contribute
towards the legal fees, if you’re a longstanding customer and you have a good
relationship with the bank. I had a
loan approved for a client recently that
included NZ$400 towards legal costs.”
An additional cost the client might
face is a property valuation, which costs
roughly NZ$350–450, O’Brien explains.
It is an expense that lenders generally
cover in Australia; however, O’Brien
says that banks often don’t need a
valuation on an 80% loan with a 20%
deposit. Even if the valuation is required,
O’Brien views this as a positive.
“It’s actually great, because the client
and I can see the valuation before I
give it to the bank,” O’Brien says. “The
client can then see the description of
the property and comparison sales of all
the streets around them, and that gives
buyers the confidence to go ahead.”
Property taxes
According to New Zealand Inland
Revenue, no stamp duty is payable
– ever. And land tax was abolished in
1992. Capital gains tax doesn’t exist in
New Zealand; however, the Australian
Tax Office requires all foreign income
to be declared when you file your
Australian tax return.
Depreciation
Depreciation in New Zealand is more
generous than in Australia. Firstly, and
importantly, depreciation commences
on the date of purchase, not the date of
construction – as is the case in Australia
– meaning a 30-year-old property has
the same depreciation values as a brandnew house.
You can also choose between the
diminishing value (3% pa) and straightline (2% pa) methods of depreciation.
The diminishing value method causes
the amount to decrease proportionally
each year. So a NZ$100,000 asset will
depreciate NZ$2,985 the first year,
NZ$2,895 the second year, down to
NZ$1,623 in 20 years’ time, and just
NZ$1,197 after 30 years.
Straight-line depreciation will allow
NZ$2,000 per year to be depreciated on
a NZ$100,000 asset, regardless of how
long the property is owned, which can be
more suitable for buy-and-hold investors.
Naomi Ferguson, deputy
commissioner – service delivery of NZ
Inland Revenue, says that property
Jodene (27) and Neil (28) Young own
a property in the trendy Auckland
suburb of Onehunga.
“We bought our place in June 2005
and paid NZ$410,000. Lucky for us, the
previous owner was elderly and needed
a quick sale.”
The couple have family and friends
living nearby. The area is close to One
Tree Hill – with a large park and domain
– and the shopping area in Onehunga is
currently being upgraded.
“The drive into the city, where we
both work, only takes 20–30 minutes
on a busy day, and we are local to all
amenities,” says Jodene.
After researching the property market
casually for around six months, they
began to get more serious about their
future investment decision.
“We decided to buy a property
because we wanted to get on the
property ladder... plus we were ready for
that financial commitment,” she says.
“At the time, we had recently returned
from living in the UK and we had saved a
small deposit, but in order to save more,
we lived with my parents until we had a
bigger chunk of money to play with.”
Since purchasing the place two years
ago, the Youngs have done work on the
garden, minor work to the interior, and
plan to give the kitchen and bathroom
a freshen up within the next year.
“To date, we’ve spent approximately
NZ$5,000 on materials and envisage at
least another NZ$10,000 before we could
put it back on the market.
“We plan to stay here for at least
another two years. Once we start a
family, we will look for a ‘family’ home.”
47
Invercargill is a city
that is raining riches
these days...
owners are also “able to depreciate
chattels such as carpets, drapes, light
fittings, whiteware and so on, as
separate assets”, at a rate of 33% per year
over three years.
“There is also provision to depreciate
separately items such as water heaters,
clothes lines and other fittings that are
not part of the building,” Ferguson says.
Double tax
Finding solid investments
in Invercargill
In the last three years, property investor Randall Vlietstra has owned 19 properties in
New Zealand. The Sydney-based carpenter, who is originally from New Zealand, says
his property journey has been “a lot of fun”.
“I was working on a client’s property at Vaucluse [NSW] one day, overlooking the
water with a mate, and I said: ‘How do people do this? How do they get wealthy?’ ”
Originally from New Zealand, Randall had heard about opportunities to get positively
geared properties and started his research into the New Zealand property market.
“Houses were on the market in Invercargill for NZ$30,000 and NZ$40,000, and
returning NZ$150 a week. I’d only been to the place twice in my life. Personally,
I wouldn’t live there because it’s too cold! But it has a good population, with
good infrastructure.
“The first property we bought there was in March 2004, and we paid NZ$40,000.
It was returning NZ$130 a week. After that, I started looking at properties around
NZ$60–70,000, and I could always get a good rental yield at around 11% or 12%.”
At one point, Randall had 19 properties in his portfolio but has been selling them
gradually. He aims to end up with nine properties, mortgage-free. “Basically, we want
to keep them so we have their income for our retirement,” he says.
As for leasing properties from abroad, Randall says that aside from one incident
with a tenant, he has never had problems.
“We did have trouble getting a tenant on one property once, so after about two
months, we jumped on a plane and flew over to see what was wrong. It turned out it
was on a big, exposed block on a corner, and there was no privacy.
“A quote for a fence came back at about NZ$4,000, so we went out and bought
about 50 NZ$5 pine trees and planted them around the perimeter. It rented out
straightaway – in fact, the same tenant is still in there,” he says.
Randall says there are still opportunities for investors in Invercargill, but it’s with
more value-add properties now, because the yields are not like they used to be.
“It’s still very affordable for Australians – you can still buy homes down there for
NZ$125,000 returning NZ$160 per week. So, you can still hunt out an 8% return and
get the positive cash flow, but it’s really hard to get that 10% yield now.
“The top end of the market at NZ$300,000 and NZ$400,000 is not moving at all,
but the bottom end is still going up. Because so many people are buying now,
it’s got to the stage where it’s a bit frenzied. Every time I sell a house it only takes
about three or four days to sell.
“I think it might flatten out a little, but in saying that, because there’s a huge oil
exploration going on in the southern basin, if it all comes off, they’ll be building a
NZ$5bn refinery and an international airport. So we’ll see what comes of that. It will
keep ticking away quite nicely, regardless, because it’s a sustainable little area.”
48
As a result of the Closer Economic
Relations (CER) trade agreement struck
between Australia and New Zealand in
1988, Australians can purchase property
and enter into mortgages in New
Zealand without difficulty.
Australia has a double tax
agreement with New Zealand,
meaning that Australians who earn
rental income from properties in
New Zealand pay tax only once – in
Australia – but investors will still
need to report to the New Zealand
tax office, says Mary O’Brien.
“You must do a tax return on 31
March with the New Zealand Inland
Revenue department,” says O’Brien
and adds, “then you show that to your
Australian accountant.
“I recommend you get an accountant
in both New Zealand and Australia.
Then the accountants can talk to each
other and make sure everything is
running smoothly.”
Other tax issues
As in Australia, expenses related
to your New Zealand investment
properties, such as interest incurred
on borrowings, council rates and
maintenance relating to the properties,
can be negatively geared against
income received.
However, because your only income
in New Zealand is rent, any losses
will accumulate in New Zealand, as
you are not able to negatively gear
New Zealand property losses against
Australian income.
On the plus side, keep in mind
that visiting your investment property in
New Zealand could be a tax deduction
– check with your accountant.
Source: New Zealand Inland Revenue
www.ird.govt.nz
Property | international opportunities
Real life
Buying the big blocks
Simon Bruce is a 32-year-old Australian living in Japan. He works as a recruitment
consultant and currently has investment properties in both New Zealand and Australia.
Three-bedroom house
Invercargill
Purchased: May 2006
Paid: NZ$155,000
Rent: NZ$220 per week
Three-bedroom house
Invercargill
Purchased: May 2006
Paid: NZ$170,000
Rent: NZ$220 per week
“Initially, I decided to invest in property
in New Zealand because there was no
stamp duty. Also, high interest rates
equal high rents, and the relatively low
cost of purchasing properties was
also attractive.”
Simon found a property sourcing
company online that pointed to
Invercargill. “They found me some
properties, so I flew over to New Zealand
to look at these and other properties.
They were also kind enough to spend the
entire weekend with me and show me
around town and teach me the good and
bad points of the area.”
The high recommendation, affordable
prices, growth potential and low vacancy
rates were all reasons why Simon decided
to invest there.
“I wanted something close to major
facilities with good road access, and
large blocks with houses located at
the front or back of the block for future
sub-dividing. I also wanted three to four
bedrooms so it would be suitable for the
average family.”
He bought two three-bedroom houses
in May 2006 and paid NZ$155,000 for one
and NZ$170,000 for the other.
“With one of my houses, I’ve had
trouble with rent not being paid, but
this was sorted out with minimal hassle.
However, I’ve not been happy with the
performance of the property manager
dealing with this property and I plan to
change soon.
“I don’t find it difficult to manage my
property from a distance. I have property
in Australia and New Zealand, but live
in Japan.
“I have very good contacts in both
locations and it is relatively easy.
“I still have plans to continue to expand
my portfolio in New Zealand. My next
step would be to build on the back of my
existing blocks.”
Simon recommends being highly
selective when choosing property
managers – because if you choose the
right one, he says owning property can
be a very “hands off” investment.
“My biggest recommendation to
investors who don’t live in the area is to
choose your contacts carefully. There
are some very good property sourcing
companies that charge a reasonable fee.”
“I also strongly suggest that if you’re
buying in a new town, then fly over there
to check it out. You only have to do it
once, but actually being there allows you
to get a true feel for the area – and will
leave you confident to buy there again
and again.”
Resources
To search properties in New
Zealand for sale online, go to:
www.allrealestate.co.nz
www.trademe.co.nz
www.realestate.co.nz
The following industry websites
will also give you a better
understanding of the New
Zealand property market:
Real Estate Institute of New
Zealand (REINZ)
Access market trends, news, facts
and statistics direct from the
professional body for the real estate
industry in New Zealand
www.reinz.co.nz
NZ Property Investors
Federation (NZPIF)
The umbrella organisation for 20
local property investors’ associations
throughout New Zealand
www.nzpif.org.nz
Quotable Value
Valuation services and online
reports, including sales history
figures and demographic profiles,
for various New Zealand markets
www.qv.co.nz
Property Council of New Zealand
Industry association focused on the
commercial property sector
www.propertynz.co.nz
Statistics NZ
Economic and statistical information
www.statisticsNZ.govt.nz
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