There are mixed feelings for those looking to invest in New Zealand. Many feel that the prices here are much too high – some of the highest in the world. Yet some overseas investors see the property sector as a good opportunity and one that is likely to pay off in the long term.
If you look at the data, there are many things that could push this housing market into speculation. The key question investors need to know is if the housing market's fall is more of a correction or if it is likely to turn into a crash. While either situation would be worrisome, one may be better than the other.
The Real Estate Institute of New Zealand announced some painful numbers last month, showing that house sales had all but stopped last month in comparison to recent activity (it was a seven year low) where only 5,186 properties sold as copmpared to 7,566 in January of 2007. Property prices also fell from $345,000 in December and to $340,000 in January.
But overseas investors still see property investing here as a potential return. The economy is strong and growing. Additionally there is no capital gains tax in place. There are no restrictions on overseas ownership either. The legal system is very similar to that of the UK's as well. More so, foreign investors often come for the quality of life that is seen here, though the largest draw is that of foreign investors looking to see the long term profit rise.
Each year, New Zealand issued 45,000 permanent residencies to foreigners. Of those, some 29 per cent are those from UK residents.
