Demand for investment property in New Zealand has never been greater and the signs are that with current immigration levels and many ex-pat kiwis returning home or purchasing from abroad, the demand will continue. With current annual yield of between 7-11% and capital gain as high as 13% for residential property many kiwis are switching from managed funds to property as their primary retirement vehicle.
Monday, November 17th 2003, 6:53AM
by The Landlord
Part of the demand has been due to urban population growth, particularly in Auckland, which is growing by 49 people a day, but also by the "coastal land grab" which has seen areas like Nelson/Blenheim, Queenstown and Northland achieve massive capital gains in the last five years. Many areas like Mt. Maunganui, the Coromandel and Paihia have also seen strong growth, more by kiwis looking for holiday homes than purely as investments.
A key point to remember is to use your home as equity to purchase rental property, rather than paying off your mortgage, then "trading up" to something better and renting out current your home. This allows you to claim maximum tax deductions on your rental property. This of course means you will have greater debt, but it is that debt that allows "gearing" - talk to your accountant, lawyer or financial advisor - if you don't have an accountant we can recommend someone to you.
