British investors are starting to eye up New Zealand. David Boyd explains the attractions

Blessed with some of the most spectacular scenery in the world, a population density of only 15 people per square kilometre (compared with 243 in the UK) and a more relaxed, secure, sunny lifestyle, the attractions of New Zealand are easy to see.

What is less well known are the many benefits of investing in New Zealand property.

Taxes are one of the biggest impediments to property investment in the UK. You’ve got Stamp Duty when you buy, Capital Gains Tax when you sell and Inheritance Tax when you die. Wouldn’t it be simpler if they just didn’t exist? Well, in New Zealand they don’t.

Provided you don’t deliberately and obviously buy for the express purpose of selling on in the short term, you won’t have any property taxes.

Transparency and familiarity are important aspects of property investing. Transactions completed in another language with a different legal system always have the added uncertainty that you don’t know what’s going on.

New Zealand’s legal system is based on the UK’s and trusts are used.

With no gazumping or gazundering, a stable political and economic system and unemployment at just 3.4%, the country also ticks the boxes for reliability and stability.

Add to all this the bullish capital growth in the last five years and freedom to invest in a wide range of property types – unlike in Australia – and you get strong investment credentials.

Before you go leaping in, though, there are some points to keep in mind.

Areas with the most developments are not necessarily the best investments, and some recent construction has been poor and unpopular with New Zealand buyers and renters.

Let’s look at the contenders of Queenstown, Christchurch, Nelson, Wellington, Tauranga and Auckland one by one.

Queenstown

Known as the adventure capital of the country, Queenstown has year-round activities including bungee jumping, jet boating, rafting, skiing, parachuting or tramping through the stunning landscape. Interest in the region has been strong and developers have capitalised on this by creating numerous new developments.

The Real Estate Institute of New Zealand, which was used to obtain all property price statistics in this article, recently created a new region of ‘Central Otago Lakes District’ which includes Queenstown. This area is now the most expensive in the country with a median sale price of NZ$420,000 (GBP£167,500).

Queenstown will always be popular but there are concerns that the demand cannot keep up with the current supply. Highdensity housing is disliked by most New Zealanders and some of the recent Queenstown construction is just plain ugly.

If there’s a bubble to be burst, then Queenstown, which depends upon tourism, will be one of the first to feel the pain. Unless you’re an expert in the Queenstown market, it’s best to hold off at the moment. If the area is irresistible, then the less developed but picturesque Wanaka is probably a better bet.

Christchurch

Touted as the most English city by all except the English living there, Christchurch is the unofficial capital of the South Island.

The city was planned by Anglican forefathers back in the UK, hence its grid-like layout. Like most cities in New Zealand, Christchurch has expanded outwards rather than upwards as manufacturing, telecommunications and research and development have brought more workers to the city.

The median sale price for Christchurch City is now NZ$275,000 (GBP£109,500) with growth likely to be steady rather than spectacular. The area is solid and wellestablished and will remain a popular choice for immigrants.

Nelson

With more annual sunshine hours than the rest of the country (2,420), the lowest crime rate and close proximity to beaches and three national parks, Nelson holds a lot of attraction for locals and immigrants from the US and UK alike.

Surrounded by hills and the sea, Nelson has been expanding where it can. Nearby Richmond is one of the fastest growing towns in the country and Tasman is also expanding.

Nelson is a great place to live, but this isn’t breaking news. In the last five years, prices in Nelson have increased 80%, with most of the growth from August 2002, when the median sale price was NZ$159,000 (GBP£63,500) to December 2003, where prices peaked at NZ$310,000 (GBP£123,500).

While other regions have continued to increase since this time, Nelson’s prices have fluctuated and the September 2005 median was NZ$277,000 (GBP£110,500). A likely explanation is that the rest of the country is catching up on the astonishing growth that Nelson has experienced.

The area is sure to be a medium and long-term prospect, but in the short term there is unlikely to be significant change.

Wellington

The capital and the cultural centre of the country, Wellington is home to the Te Papa Museum, the Royal New Zealand Ballet and the New Zealand Symphony Orchestra. It’s also got a strong cosmopolitan feel with a thriving café culture and over 400 restaurants, more per capita than New York. Industry is often to do with government, e-business and more recently film and television, building on the success of the Lord of the Rings trilogy.

Property in Wellington is diverse and includes housing with sought-after sea views and a series of commuter suburbs including Lower Hutt, Upper Hutt and Petone.

The median sale price is now NZ$296,500 (GBP£118,000) for the region, up from NZ$280,000 (GBP£111,500) from this time last year.

The region is good for solid investments but lacks the high rentals that can be achieved in some more tourist-focused centres.

Tauranga

Situated in the heart of the Bay of Plenty, Tauranga with about 100,000 residents is one of the fastest growing cities in New Zealand. The excellent climate, stunning sea views and beaches continue to make it very appealing. Tauranga includes the town centre, the rapidly growing Papamoa and Mount Manganui.

Population increases have fuelled property prices with the median sale price increasing from NZ$168,000 (GBP£67,000) in August 2000 to NZ$325,000 (GBP£129,500) in September 2005 – a 93% rise. It’s hard to say how much of this is due to properties increasing in price and how much is down to new more expensive developments being sold.

Provided developments are in harmony with the surroundings, it is hard to see Tauranga losing its popularity, and it should be on the shortlist of areas for New Zealand property investors.

Auckland

Auckland’s population is almost a third of the country with 1.25 million people. The gateway to the country with the major international airport and business centre, it’s also one of the most spread-out cities in the world, being the size of Los Angeles.

As mentioned earlier, New Zealanders tend to build outward rather than up.

Buying an apartment in the central business district is probably not a wise idea at the moment, as over-supply has led to stagnating prices and falling rents. Increasingly, people are looking northwards.

The Rodney District is the northernmost part of the Auckland region and used to be an area with sleepy retirement settlements and holiday homes.

However, the area has undergone extensive motorway improvements and the planned further extension from Orewa to Puhoi is expected to be the largest road project ever undertaken in New Zealand.

The infrastructure improvements have opened up the 426km of coastline with its scenic parks, reserves, world-class golf courses and, importantly, slashed commuter times into central Auckland. Its proximity to central Auckland has seen the population grow steadily to just over 80,000 and it’s estimated by the council that by 2016 the population will exceed 102,000.

In the last five years, North Rodney’s median sale prices have increased 85% from NZ$210,000 (GBP£83,500) in October 2000 to NZ$389,000 (£155,000) in September 2005. Although other areas have done better, it is more the potential of the area that makes it so exciting. Few outside of the country have heard of the Rodney District and it’s not being pushed by developers to the international market, but with the right research it could be where you’ll find the best property investments in the country.

David Boyd runs NZ Property Finders, a British-based agency set up to assist people to relocate and invest in New Zealand property. For more information visit www.nzpropertyfinders.com or call 020 8755 5853 or email enquiries@nzpropertyfinders.com