Why this property makes a lot of sense lies in the market dynamics and the global currency movements. Here are the reasons why the NZD has taken a major tumble:
1. The carry trade: The carry trade has broken but it will rebuild. The implication is that NZD again looks like good buying. Confidence will rebuild in NZD as the country is now more competitive than ever, and its a major food producer. We might not pay as much for premium food, but we will continue to eat, and the food market fundamentals don't look bad either, which is why we like the rural market
2. Rural areas - some parts of NZ have been undergoing depopulation so property prices have not fallen. Some areas which were depopulating are now growing, so in certain markets the dynamics are changing. Rural areas like this which were yield propositions are now growth propositions.
3. Tax benefits - NZ has some very attractive elements which favour investment. These include no capital gains tax on property, no transfer taxes, no GST. The 4% agent commission is levied on the seller.
NZ is also getting punished because it has a lot of debt, but one needs to appreciate that its terms of trade just improved a heap because its currency is weak and commodities (which it exports) are denominated in USD. The other attraction is that one-third of its external debt is denominated in AUD, and many will realise that the AUD roughly tracks the NZD, and that at a time of weak metal prices, the NZD might actually do better. But importantly the NZD is essentially not exposed to AUD.
I have attached here some charts showing just how attractive NZ property is in your local currency. Oh...and did I mention that NZ has some of the most open foreign investment and migration regimes in the world...because too many technical people keep moving to Australia for higher pay. The benefits of investing in NZ are particularly good for the Japanese, Europeans and anyone from a US-denominated currency. Its also one of the most beautiful countries in the world and contrary to my initial view people can be really friendly in this country. My earlier holiday perceptions were wrong.