Tread warily over dollar rise - Newland

It is a case of dollar for dollar for Kiwi and Australian investors, Auckland property expert Olly Newland says.

Commenting on the current rise of the NZ dollar against the AUD, Newland says parity with the AUD will work both ways and it’s a case of one step at a time.  Yesterday the NZ dollar inched closer to the AUD and looked as if it would achieve parity – splendid news for holiday makers but a grim turn for exporters.

“You’ve got Aussies looking at New Zealand property and with their stamp duty and capital gains tax they must be wondering whether it’s worthwhile purchasing … and whether the dollar could fall where they may pick up some profit through arbitrage,” Newland says

“You talk to someone here and they are doing the exact opposite. Likewise the Kiwis who are thinking of seriously at investing in Australia, despite all the extra taxes, stamp duties etc, may be encouraged by the parity business. Basically, it’s dollar for dollar as far as New Zealand is concerned.”

He says he thinks a lot of people are walking into a minefield if they’re thinking of buying into Australia. “I’ve bought several buildings and apartments in Australia and they ain’t the same, believe me,” Newland says. “If you’re buying an affordable home to live in, no worries. But if costs more than $500,000 you’ve got to pay stamp duty, whether you’re a home owner or investor.

“You get two years to sell your existing home if you move away and purchase elsewhere before it becomes an investment property. It’s a sliding scale, but eventually you’ve got to pay it.

“Australians are massively upgrading their own homes far more than here in NZ because the home is tax free, so they pour the money into their own home knowing that the value will go up and then they sell it tax free rather than invest into another – a much better tax dodge than many others.

“This is what distortions do. And this what is going to happen here eventually – funny business with taxes.

“When you sell your own home you make a huge profit – all tax free. If ever tax changes were made to control the market, they have to control all the market including the family home and not just investors.

“Controlling a small part of the market leads to distortions and unfairness.”