The latest news is that the NZ dollar (NZD) has fallen to a 9-year low against the Australian dollar (AUD). This is good news for Australians and New Zealanders who can take advantage of the disparity in currency values. Consider the following:1. It makes sense for Australians to buy property if they think their is an opportunity to transfer funds at an opportune low interest rate.
2. It makes sense for Australians to buy property if they think the NZD will recoup its current losses against the AUD.
3. It makes sense for Australians with a house in Australia to buy a place in NZ, and use the rent from their Australian property to pay the interest on their NZ property. They will earn more rent off their (generally) more expensive Australian home, and they will benefit from the cross-rate when they transfer those AUD to NZD. They will have a nice income whilst the cross rate favours AUD. They do need however to anticipate a peaking of the resources boom in Australia to best transfer their wealth. I suggest that will occur price to the peak in metal prices. It will have more to do with consumption levels. The Australian government will be raising interest rates to prevent that, which will also help the AUD:NZD.
Irrespective of your outlook, there is the opportunity to stagger your currency transfers across the period of your loan. Clearly if Australians want to retire in NZ then they need to think about buying property now rather than when it reaches those lows, as they will need to set up a bank account. It need only be a NZD account in Australia if your bank offers that. My guess is that ANZ would. The opportunity is similarly attractive for those NZ'ers working in Australia, to send their money home. I would suggest however that it is premature to send money back to NZ.
There are two fac
tors working for the AUD - strong business investment in mining & energy, strong commodity prices, and the need to raise interest rates to reduce inflationary pressures. Looking at the chart above it is apparent that there are two lines of support for the NZD - the 0.70 and 0.75 levels. I would suggest the NZD is eventually going to get to 70c, so I would suggest people target 0.71 for a reasonable entry into the NZD, as its difficult to pick the bottom. I call this chart pattern an 'accretionary wedge'. We are already seeing this pattern unfolding, as the NZD is already at a 9-year low. The trick is to be prepared to profit from it.
If you want to know more about the NZ property market, i.e. Where to buy, etc, you might want to look at our property guide - see link below.
NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
2. It makes sense for Australians to buy property if they think the NZD will recoup its current losses against the AUD.
3. It makes sense for Australians with a house in Australia to buy a place in NZ, and use the rent from their Australian property to pay the interest on their NZ property. They will earn more rent off their (generally) more expensive Australian home, and they will benefit from the cross-rate when they transfer those AUD to NZD. They will have a nice income whilst the cross rate favours AUD. They do need however to anticipate a peaking of the resources boom in Australia to best transfer their wealth. I suggest that will occur price to the peak in metal prices. It will have more to do with consumption levels. The Australian government will be raising interest rates to prevent that, which will also help the AUD:NZD.
Irrespective of your outlook, there is the opportunity to stagger your currency transfers across the period of your loan. Clearly if Australians want to retire in NZ then they need to think about buying property now rather than when it reaches those lows, as they will need to set up a bank account. It need only be a NZD account in Australia if your bank offers that. My guess is that ANZ would. The opportunity is similarly attractive for those NZ'ers working in Australia, to send their money home. I would suggest however that it is premature to send money back to NZ.
There are two fac
tors working for the AUD - strong business investment in mining & energy, strong commodity prices, and the need to raise interest rates to reduce inflationary pressures. Looking at the chart above it is apparent that there are two lines of support for the NZD - the 0.70 and 0.75 levels. I would suggest the NZD is eventually going to get to 70c, so I would suggest people target 0.71 for a reasonable entry into the NZD, as its difficult to pick the bottom. I call this chart pattern an 'accretionary wedge'. We are already seeing this pattern unfolding, as the NZD is already at a 9-year low. The trick is to be prepared to profit from it.If you want to know more about the NZ property market, i.e. Where to buy, etc, you might want to look at our property guide - see link below.
NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
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