Why Should You Invest in New Zealand Property?
Investing in property has long been considered a reliable strategy for wealth accumulation and retirement planning, so why should you invest in New Zealand property?
When it comes to property investment, New Zealand stands out as an attractive destination.
With its stable economy, strong legal framework, and growing population, New Zealand offers numerous advantages for long-term gains and retirement planning.
Right now seems to be a ‘perfect storm’ in New Zealand for entering the residential investment property market.
The supertanker is turning, the planets are aligning, and soon the scene will be set for the next upswing in house prices.
New Zealand Property: A Worthwhile Investment For Long-Term Gains And Retirement Planning
In this article, we will delve into the key reasons why you should invest in New Zealand property and that it’s a worthwhile investment for individuals seeking financial security in the long run.
We will also uncover why now truly is the perfect storm for entering the investment property space.
If circumstances allow, it would be advisable to think seriously about getting in while it’s the ‘calm before the storm’.
1. Stability and Economic Resilience:
New Zealand boasts a stable and resilient economy, which provides a solid foundation for property investments.
The country has a well-regulated financial system, low corruption levels, and transparent business practices.
These factors instil confidence in investors and contribute to the overall stability of the property market.
2. Strong Legal Framework and Property Rights:
New Zealand has a robust legal framework that safeguards property rights, offering investors a sense of security.
Our property laws ensure fair and transparent transactions, protecting both buyers and sellers.
The well-established legal system promotes confidence in property ownership, which is essential for long-term investments.
3. Steady Population Growth:
New Zealand has experienced consistent population growth over the years, driven by a combination of natural increase and net migration.
This population growth fuels the demand for housing, making property investment an attractive option.
Moreover, the government’s proactive approach to immigration and policies that encourage foreign investment contribute to the sustained demand for housing in the long run.
Net migration is up, and it is not showing any signs of slowing. Where are all these people going to live? We already have a supply/demand issue.
4. Limited Supply of Land:
New Zealand’s land availability is limited due to its geographical constraints, such as mountains and water bodies. This scarcity of land contributes to the appreciation of property values over time.
As the population grows and urbanization expands, the demand for property continues to increase, leading to potential capital gains for investors.
5. Rental Market and Passive Income:
Investing in New Zealand property offers the opportunity to generate passive income through rental yields.
The country’s rental market is robust, driven by a combination of factors such as population growth, immigration, and tourism.
By purchasing properties and renting them out, investors can generate steady income streams, which can be particularly valuable for retirement planning.
6. Diversification Benefits:
Investing in property provides diversification benefits for an investment portfolio. Real estate has a low correlation with other asset classes, such as stocks and bonds.
Adding New Zealand property to a diversified portfolio can reduce overall investment risk and increase potential returns.
It serves as a hedge against inflation and market fluctuations, enhancing the long-term stability of one’s investment portfolio.
When we calculate the annual return on a negatively geared property (a property that requires a weekly top-up), the return on investment (based on a 10 year investment horizon at 4% per annum capital gain) outperforms all other standard asset/investment classes (average 20%-40% per annum).
7. Favourable Mortgage Conditions:
New Zealand’s mortgage market offers favourable conditions for property investors. Interest rates are set to start decreasing late 2023/early 2024, and the lending market is well-regulated.
Access to mortgage financing allows investors to leverage their investments and potentially amplify their returns.
The availability of flexible mortgage options provides investors with opportunities to structure their investments according to their risk tolerance and financial goals.
8. Tourism Potential:
New Zealand is renowned for its breathtaking landscapes, adventure activities, and rich cultural heritage. The country attracts a significant number of international tourists each year.
For property investors, this presents an opportunity to capitalize on the growing tourism sector by investing in holiday rentals or properties located in tourist hotspots. Tourism-driven rental income can supplement long-term gains and retirement planning.
9. Government Policies and Incentives:
The New Zealand government recognizes the importance of a thriving property market and has implemented policies to support it. These policies include initiatives to stimulate construction, increase housing supply, and promote affordable housing.
The government’s commitment to maintaining a favourable investment environment enhances the long-term potential for property investors.
We are focussing in on new-build property when we speak on this subject. New build is always our preference for clients – for many many reasons.
10. Lifestyle Benefits:
Investing in New Zealand property offers not only financial advantages but also lifestyle benefits. The country is known for its high standard of living. In fact, New Zealand is in the top 10 countries in the world where high-net-worth individuals are moving to.
As this world continues to struggle, in many ways New Zealand is seen to be the jewel in the crown of the British Empire.
11. Market Bottom:
It’s largely agreed that we are at the bottom of the property market in New Zealand. We are already seeing signs of it turning.
No one can crystal ball gaze when the ‘official’ bottom will be in, nor when it will turn. But, I know which side of the timing equation I’d rather be on!
12. Deals to be done:
I have never seen Developers and Builders so keen to ‘do deals’ than right now. This surely can’t last. We are truly in a buyer’s market.
Those who make their investment decisions on FOMO, Herald headlines, or what the TV News are saying, will enter the market once it’s taken back off up the other side. Simply put, they will pay more for what they can buy right now in this current market.
I’ve said it before, and I will say it again – NOW is the perfect storm for a change in this current investment property market. We are in the calm before the storm. Act accordingly.
Daniel Carney
Financial Adviser
Goodlife Financial Advice