Every time the world plunges into recession we witness a collapse in the NZ and Australian dollars. These small nations (NZ 25% the size of Australia) are the most heavily traded currencies in the world based a per capita comparison, and without a doubt the most volatile currencies among the OECD countries. The cyclical nature of their trading makes them compelling opportunities for not just forex traders, but property investors as well.
Now NZ asset markets are still falling so you might think its premature to start buying property in NZ. It is true that city property is still too expensive. True enough! But there are bargains to be had in rural areas. Properties offering attractive yields, and of course the appealing forex rate, so for the next few years you will be able to pay off your mortgage in quick time. You can then use the property to pay off other loans as you acquire more property, knowing that when the currency starts rising, you would have established a self-funding asset position in the country.
We think that in the next 6 months we are going to see the NZD fall to its historic low of $US0.40. The implication is that the NZD will have halved in around 18 months. We all know of the fate of Iceland. Three quarters of Iceland's businesses are bankrupt. Well, NZ is not nearly as indebted to the outside world, but its concerns will weigh on its currency. NZ is however in a much better position because of its food export earnings. But we will nevertheless rejoice in the weaker currency, taking every opportunity to buy more property and pay off our first. At some point we will start buying urban (city) property, but we are a long way from that point.
I don't know of any country that can match the yields of Japanese foreclosed property at the moment, but for property investors interested in flipping NZ properties, the volatility of the NZD currency must appeal.
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Andrew Sheldon www.sheldonthinks.com
Now NZ asset markets are still falling so you might think its premature to start buying property in NZ. It is true that city property is still too expensive. True enough! But there are bargains to be had in rural areas. Properties offering attractive yields, and of course the appealing forex rate, so for the next few years you will be able to pay off your mortgage in quick time. You can then use the property to pay off other loans as you acquire more property, knowing that when the currency starts rising, you would have established a self-funding asset position in the country.
We think that in the next 6 months we are going to see the NZD fall to its historic low of $US0.40. The implication is that the NZD will have halved in around 18 months. We all know of the fate of Iceland. Three quarters of Iceland's businesses are bankrupt. Well, NZ is not nearly as indebted to the outside world, but its concerns will weigh on its currency. NZ is however in a much better position because of its food export earnings. But we will nevertheless rejoice in the weaker currency, taking every opportunity to buy more property and pay off our first. At some point we will start buying urban (city) property, but we are a long way from that point.
I don't know of any country that can match the yields of Japanese foreclosed property at the moment, but for property investors interested in flipping NZ properties, the volatility of the NZD currency must appeal.
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Andrew Sheldon www.sheldonthinks.com
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