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New Zealand’s housing prices are outpacing almost every country and the strong growth of our property market has been a hot topic of discussion worldwide. We have been warned that a housing bubble is only around the corner, but the luxury property market has broken records yet again this year, continually attracting overseas investors. Here we are going to discuss why exactly this small island is attracting attention from all over the world.
Our country has a strong, stable and globally competitive economy. New Zealand is currently ranked as the most prosperous country in the world in the Legatum Prosperity Index. One of the main factors fuelling interest is New Zealand’s flexible immigration policies and business-friendly taxation system.
Our tax system includes no pay roll tax, no social security tax, and any income from overseas investment is exempt from New Zealand Tax for the first four years. It’s clear this country offers a less complicated system, that ensures the support of financial development, and new buyers and their businesses.
The country’s beauty and scenic environment make it a natural draw, and the most sought-after areas are inner city and harbourfront suburbs of Queenstown and Auckland. Also, Waiheke Island in the Hauraki Gulf, is attracting international buyers for its luxury homes and its position as an exclusive island. While there have been measures put in place to slow down the housing boom, the high-end of the property market is really thriving, particularly in Auckland. The city recorded a 63 percent growth in its luxury property market and in 2016, sale transactions were valued at over NZ$1 million. Auckland offers attractive selling opportunities for buyers and property is outperforming investments in shares.
As a result of the country’s booming economy and rising immigration levels, the housing market has experienced unprecedented pressure. This is also one of the main reasons why the world is taking note of New Zealand, because there is much debate over whether the soaring house prices could lead to a major crisis. According to the Dermographia International Housing Affordability Survey, Auckland’s median house price is 10 times that of a median annual household income. Three times the average income is the accepted global benchmark and considered affordable.
Overall, this country is attracting attention as a great place for foreign investors and an opportunity for a thriving business. New Zealand has one of the highest valued property markets in the world. However, Auckland’s inflated house prices are making it difficult to attract and hold on to workers in the city, as they can’t afford to buy a home. The government will have to make amends to ensure the property market benefits both ordinary families and foreign investors, for a more viable market for all. Also, NZ will need a lot more housing to keep up with the demand and the government will need to consider the impact of rising mortgage rates on potential buyers.
When looking to the future of the property market, it’s more about understanding the wider economic and social factors. At the moment, we have all-time record net migration, our construction sector is growing and our employment is strong. So, the standard market is in a good position and people will continue to invest as long as they see value in the property they are purchasing. While changing dynamics in the market may create a slight price drop, we are unlikely to see a major crash, and can expect to continue to lead the way in the global property market.
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