In the eyes of many New Zealand will forever be seen as the poor cousin of Australia but in reality this is not the case. One example of this is the New Zealand property market which after taking into account inflation was the best performing in the world over the last year. While strictly speaking Turkey with a 13.9% increase in property prices was top of the league, after taking into account inflation New Zealand is the stronger market.
This is an ongoing reflection of the strength of the New Zealand economy as well as the New Zealand property market. It seems that overseas investors now have a very strong appetite for New Zealand real estate and this is unlikely to change in the foreseeable future.
Auckland property prices
The average cost of property in Auckland has now topped the NZ$1 million mark with a 15.9% increase in Auckland property prices over the 12 month period ended August 2016. This equates to around £560,000 which compares to London property prices of £472,384. So, despite the fact that London receives more than its fair share of press coverage with regards to property prices, Auckland in New Zealand is even more expensive!
The recent price increases across Auckland equate to around NZ$20,000 a month and when you bear in mind the weak pound, since the Brexit vote, New Zealand just became very expensive for UK investors.
Property deposits in New Zealand
One interesting development over the last few weeks has been the announcement of new regulations from New Zealand’s central bank. This now means that those looking to acquire property need to put down a deposit of at least 40% in cash. The idea is that by restricting access to the market this should keep prices more under control although whether this will work remains to be seen. Cash rich Chinese investors are unlikely to be put off by a large cash deposit but could first-time buyers in property hotspots afford this?
UK nationals looking to New Zealand
It was interesting to see that the number of British nationals looking to move to New Zealand (in the aftermath of the Brexit vote) doubled to around 10,000 compared to the same period last year. This throws up two interesting facts, the ever-growing popularity of New Zealand amongst those looking to leave the UK and the possible by-product of the Brexit vote which has not been discussed in great detail – more people wanting to leave the UK.
As the UK government begins the long hard path to exiting the European Union it will be interesting to see how many UK nationals do actually move overseas. The 20% reduction in sterling since the vote does not bode well for the future and increase in the cost of property in places such as New Zealand is also disappointing although, on the upside, we have not yet experienced any significant weakness in the UK property market. So, for those looking to move away from the UK there is still a fairly liquid and strong UK property market which should not impede those looking to raise capital for a new life.