Unlike its Australian neighbour and other countries around the world who have begun introducing punitive taxes to deter foreign property investors, New Zealand openly welcomes them.
This open door policy has resulted in the commercial capital of Auckland over taking Toronto to become the luxury property hotspot of the world.
According to Christie’s International Real Estate Auckland registered growth in luxury property over $1 million of a staggering 63 per cent last year due to a number of factors.
‘A strong economy, magnificent natural beauty and a friendly image are key selling points for New Zealand’s foreign real-estate buyers,’ said Christie’s. ‘Add to that the country’s property laws – which do not include a stamp duty, capital gains tax or visa requirements – and the result is one of the world’s most attractive property markets for overseas buyers.’
The Real Estate Institute of New Zealand confirmed that the number of homes sold for more than one million New Zealand dollars (£550,000) rose by a third in the first half of 2016
Even after registering this monumental price growth, Auckland still qualifies as one of the lowest priced luxury property markets when compared to its peers around the world.
Whilst property can cost up to $4,000 per square foot in Monaco, and $3,000 per square foot in Hong Kong, average prices for high end property with views in Auckland still work out at under $400 per square foot.
Many countries around the world have begun bringing in extra taxes for foreign buyers in a bid to cool property markets, with Vancouver recently introducing an extra 15 per cent tax for foreign property buyers and many Australian states also introducing extra taxes. But New Zealand have no plans to follow suit.
‘While nothing has been ruled out, we are not actively pursuing any further property taxes at this time,’ a spokesman for New Zealand’s Revenue Minister Michael Woodhouse confirmed.
Although the last time property rose quickly in New Zealand in 2014 the central bank raised interest rates to slow it down, this month they have actually cut rates to an all-time low of 2 per cent.
Many New Zealanders are also returning from abroad amid a downturn in neighbouring Australia and troubles elsewhere. Overseas students also play a role in increasing the demand for property, as does a citywide housing shortage in Auckland.
It seems a good opportunity exists for overseas property investors to take advantage of the increasing demand for housing in New Zealand.