5 Reasons why New Zealand real estate is attracting savvy Singaporean investors.
Singaporeans are afforded the exclusive opportunity to purchase New Zealand property without needing government approval, alongside only Australians and Kiwis. This is thanks to a free-trade agreement called ANZSCEP, signed in 2000, exempting Singaporeans and Australians from the Foreign Buyer Ban imposed by the New Zealand government from 2018.
You can also purchase properties if you are a Singaporean resident and live more than half the year in NZ.
But why invest in New Zealand real estate? Here are the top reasons why Singaporeans don’t want to miss out on taking advantage of the exclusive opportunity for returns to be made…
1. Freehold properties
Unlike Singapore where most properties are leasehold, in New Zealand the vast majority of properties are freehold, meaning you get to hold the property in perpetuity and even pass it on to future generations — not only setting you up now, but future children and other family members too.
2. No Capital Gains Tax
Effective from 1 July 2024, any property sold after this date that has been owned for at least two years, will not be subject to a capital gains tax. Capital gains tax only applies to a property being sold within two years after purchase.
3. Opportunity for high capital growth
New Zealand house prices increased by 9.4% per year over the previous 10 years (May 2012 – May 2022), according to the REINZ house price index. At this rate, if you invested in a property worth $400,000 in May 2012 it would be worth $982,275.27 in May 2022 — that’s a jaw-dropping $582,275.27 increase in capital gains alone! Even better, this would not be subject to any capital gains tax, so is money straight in your pocket, or equity that can be used to expand your property portfolio.
4. No Stamp Duty
New Zealanders are very unfamiliar with the term ‘Stamp Duty’ for one reason: Stamp Duty does not exist in New Zealand — even if you are a foreign buyer!
Singaporeans, however, are forced to pay an extortionate amount in stamp duties depending on the purchase price and the number of properties you already own.
Here’s an example to compare buying in Singapore VS buying in New Zealand:
Tim and Lianne are a married Singaporean couple looking to buy a third property as an investment. They are looking to buy a condo worth $1 million. In Singapore, they would be subject to the following stamp duties:
Buyer Stamp Duty = $24,600
Additional Buyer Stamp Duty = $300,000
Total Stamp Duty = $324,600
And purchasing a $1 million property in New Zealand: $0.
Before even getting the keys, you are already an eye-watering $324,600 worse off by buying a property in Singapore as opposed to New Zealand. The opportunity cost of the $324,600 stamp duty is a deposit for another $1 million property in New Zealand!
5. Favourable exchange rate
As it stands, and has for a number of years, the exchange rate favours Singaporeans exchanging SGD to NZD, meaning you end up paying much lower in SGD.
For example, a NZ$1 million property is reduced to approximately SG$821,063 — discounting you around 18%!
You also have the ability to use the exchange rate to your advantage and exchange NZD back to SGD when the rate is more favourable.
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