Property Investments – Australia or NZ?

The Southern end of the Anglosphere is well established as a prime real estate destination. The Australian property and New Zealand real estate markets are both thriving and can offer great investment opportunities – for those with the money to get involved that is.

In this post we will compare property investing in New Zealand with investing in Australian real estate and try to identify which one makes the best option. Of course, transferring money to buy real estate in Australia carries some costs so we will also examine these with a focus on both transferring money from Australia to NZ and transferring money from NZ to Australia.

The Australian Real Estate Market At a Glance

 

The Australian property market is worth an estimated $7 trillion (AUS $10 trillion) with an average house price of $387,818.67 USD. An interest rate increase in May 2022 however has threatened to cool the market down and it does now appear that house prices may soon begin to fall. Geographically Australia is a vast country so prospective investors need to think hard about where exactly they intend to invest; Sydney is a solid choice and while land here is the most expensive, the city continues to outperform the rest of the country with annual proper value rises of 10.9%.

 

Investing in NZ Real Estate –  New Zealand Real Estate  At a Glance

 

By comparison the New Zealand property sector is worth an annual $1.72 trillion (USD)  with an average unit price of $530.606 USD. However, the New Zealand market has now entered something of a real slump with house prices set to fall in value by an average of 9% this year. Investors have long touted the South Island city of Christchurch as the soundest city to buy property in after a decade of rapid land value increases, although some commentators feel that the previous buoyancy of the market makes it especially vulnerable if the property bubble is well and truly bursting.

Kiwi property investors who stick entirely to their native island(s) are therefore putting themselves at real risk and leaving their portfolios vulnerable to a market crash, which may now already be under way. Therefore savvy New Zealand based property investors are already hunkering down and getting established in the Australian market to try and diversify their real estate holdings and spread the risk. Afterall, the Aussie market is much larger and more diverse than the one back in New Zealand.

 

Why The Australian Property Market Is Perfect

 

Of course, a New Zealander real estate investor with a spare $500k on their hands pretty much has the world as their oyster. Most western markets allow foreign investors to buy land and there are also increasing opportunities for wealthy investors to get involved in the emerging Asian real estate markets. 

However, there are multiple factors that make Australia the logical choice for New Zealand based investors.

Firstly, geographical proximity means that Australia is the nearest and easiest country for New Zealanders to visit.  While some investors never actually visit the properties they acquire, most like to check them out for themselves before they buy. A flight from Auckland to Australia’s East Coast takes around 3 hours and costs $300 USD whereas a flight from Auckland to London takes around a day and costs nearer to $3000 USD round trip! Also add onto that the fact that New Zealand passport holders are one of the new nationalities that do not need a visa to enter Australia and also face a much easier road toward obtaining work and residency permits.

Next, the two nations’ tax regimes are more or less complimentary when it comes to foreign property investments. For example, let’s say a New Zealand resident buys a property in Australia and then rents it out to collect the income. As the property is in Australia and the rent is generated in Australia, a tax return must be filed in Australia but, any tax that is paid in Australia can then be taken into account when the time comes to file a tax return in New Zealand. Basically, although two sets of returns are needed, the tax only needs to be paid once.

Also, while the intricacies of real estate practice and conveyancing law do vary between the two countries (and even between states in Australia), they are broadly speaking quite similar. Anybody who has ever bought property in Wellington will find that they can quite comfortably wrap their head around the property buying process in Melbourne.

 

Are Aussies Also Investing in NZ Real Estate?

 

Of course, this does flow both ways and the New Zealand property market is also filled with Australian investors – in fact, Australians are one of the few holders of foreign passports who are allowed to buy property in New Zealand.

 

Money Transfers

 

Any investor looking to acquire property overseas also needs to think about the best way to move the monies as transferring large sums of money overseas generally attracts hefty transaction and conversion fees.

Although there are always going to be fees associated with international money transfers, the encouraging news is that it does not have to be as expensive as it once was. Previously, the banks pretty much had a monopoly on money transfers and charged fairly high fees and offered poor conversion rates on currency exchanges. 

These days though there are numerous companies out there specialising in money transfers who offer much lower fees and better conversion rates.

 

Transferring Money From NZ to Australia

 

For example, to transfer NZD $100,000 to Australia, ‘Send’ offers a zero-fee transfer and uses a conversion rate of 0.9003. The recipient would receive AUD $90,027.89 meaning that the transaction cost AUD $417.35.

 

Transferring Money From Australia To NZ

 

Going the other way, TorFX offers the best deal when sending AUD $100,000 from Australia to New Zealand. They also offer a zero-fee transfer and use the exchange rate of 1.1005 – the recipient would get NZD $110,048 meaning that the transaction has cost 

Final Thoughts on Real Estate in Australia

 

In summary, any savvy New Zealand property investor should seriously think about entering the Australian real estate market and acquiring at least one Australian property. So far it is looking more resilient than the New Zealand real estate market and the Australian real estate sector may weather the current turbulence relatively unscathed.

Although there are costs, concerns and considerations to take into account, at least money transfer fees are a lot more reasonable than they used to be – transferring money from Australia to NZ is cheaper than ever, and transferring money from NZ to Australia the same.