New editions of our property reports

Over the last 4 years I have prepared 4 editions of the Japan Foreclosed Property report; as well as preparing and updating similar reports for the Philippines and New Zealand. It is not my intention to continue this series of reports. Over that period I guess I have invested about 5 months of research into making the Japan editions for sales of around 300. That's $US6000. This is a stunning result for a first book, and it was not even my intent to actually write about property. Its just that I was in Japan for 3 months when I was considering writing an eBook, and of course recognising an opportunity for a very practical book. My ultimate intent was to write applied philosophy; which is the task I am embarking upon now. In the next few weeks I will launch a new website promoting these services.

As far as Japanese, NZ and Philippines property market is concerned, I will continue to support this site with feedback from readers (i.e. tagged 'Case Studies') prepared to offer such support. I will offer as much disclosure as you contributors want; and will ask you if you are happy with the content as posted for privacy and strategic reasons.

I will also post any topical stories I find. The feedback on these ebooks has been fantastic. Some people have rightly been critical of my spelling and grammatical errors; much better now after 4 editions. But aside from that, its almost been a zero complaints publication. So we are pleased with that. We have had heard some wonderful success stories with Japanese foreclosed property. We had a glowing appreciation from the Japanese Institute of Economics for our Philippines report. I did a lot of research for this 2-set book. The Philippines is a very hot market gives the disparity in West-East wages for the next 20 years; plus the 2% population growth and rapid urbanisation. Watch as new cities are built around Manila and regional airports are opened up to foreign (Chinese, Japanese, Korean) tourists. The Philippines already has among the most liberal immigration requirements in the world - you can stay there 18months before requiring to leave. More importantly, the Philippines government is starting to adopt some semblance of zoning as we see greater compliance with the law. So expect this to add to property prices; as well as result in more attractive development.

My biggest surprise with these books is probably the lack of interest of English teachers in buying Japanese foreclosed property. This is probably because most of them are 'lifestyle junkies' with no intent to stay in Japan, or maybe it speaks to their 'liberal' not-so-aspirational goals, or lack of savings. In any respect, I envisaged more of them buying foreclosed properties and turning their homes or offices into teaching schools. Most buyers have been expatriates in Asia or Japan; even fund managers and investment consultant-types.

Anyway, the opportunities in these countries are not over. I will continue to provide limited support for this and related blogs, however the property publishing is probably over unless I can farm the activity out to someone else. I know people who have become multi-millionaires buying foreclosed property, to the stage of buying entire residential apartment blocks and renting them off or selling them to students. I think I have listed such opportunities in this blog, i.e. A love hotel in Hokkaido comes to mind, decked out in 1970s decor. Very tacky! The Japanese student would probably love it.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Living and working abroad

There are obstacles to living abroad. But you know, its not as hard as you might think to live and work abroad if you are able to develop relationships in these countries or find forms of work that suit you. In my 'wonderings' I have come across people who find work abroad by doing different things. Consider the following:

1. Selling: I write books about buying property. Such book publishing allow me to live anywhere in the world because my store front is online.

2. Consulting is another activity that allows you to work anywhere in the world if you deal with your clients online.

3. Strategic career opportunities: There are certain jobs like doctors, nurses and teachers who are in strong demand around the world if you have decent qualifications.

4. Service jobs like teaching English, builders, trades jobs and tattoo artistry are also jobs that you can find if you travel. Generally though in these cases you need to tap into the informal economy, but consider this: In a large city like Tokyo, you can be sure there is a need for computer support services for all the English expatriates living there, because there are thousands there looking for a good deal who are getting ripped off because they don't speak Japanese, or have support. In such cases, forums offer support for most, but forums only offer limited support.

Different countries have different rules for staying in the country. i.e. Consider that the Philippines probably has the most liberal immigration laws. You can stay there 18 months before having to leave the country, but you pay around $30/month to extend your visa. Other than that, they care less what you do. In Japan, its a 90-day tourist visa, and hard otherwise to get a business or working visa unless you are sponsored. Having said that, you can fly to China or Korea every 90 days (3mths) if that suits you, or you can commute from another place and just stay the 90 days in gaijin houses (i.e. Short stay accommodation).

The intention of this strategy is to buy accommodation in different countries at the low-end of the market so that I can live a flexible and interesting life as a tourist. This is why a $28,000 dormitory in Japan appeals, with a $300/year rates bill, a $US55,000 house in a depopulating NZ regional city, rates a little pricey at $1700/year, or you can go a house in much of the USA for $80-120K. We also have a place and land in the Philippines.

This is truly a period of great flexibility thanks to technology. I would not equate this however with freedom. No country recognises your personal sovereignty, and no government functions on the basis of rationality as the standard of value. Under democratic tyranny of the 'populist' majority, we spread our assets widely. This is why grasslands are so prevalent. Their spores are basically blowing around the world. We like to travel light in a world of arbitrary government. Yes, that might sound a little tragic, but living a life of slavery to some over-priced, statutorily or artificially priced house is crazy. I don't own a house in Australia, my home country because with the average house costing 11.6x the average income in Sydney, I think I should be living in Japan, NZ or USA, where I can live in a decent place for 2-3 times earnings. Personally, I wish people would think so we can end this tyranny, but since we have a system of wealth extortion based on 'universal ignorance and passivity', I prefer to travel. If you are wondering where this ends up, it is either:

1. A life of repression - Japan is the model we are drifting towards - where you are all zombies entertained by mindless concrete, frivolities like alcohol, sex, etc.

2. A intellectual life - A form of meritocracy which does not yet exist, where economies grow at 16% per annum because they are not constrained by centralised government; which are not overtly materialistic because the people's intellectual sovereignty has been oppressed. In a world where ideas matter because there is a free market for them, as opposed to the statutorily regulated 'parliament' which has political parties act as gatekeepers. But you go on pretending you live in free countries because you are given some pretense of it. More on this matter at our politics blog.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The cost of living and property overseas

For those interested in buying (foreclosed) property in the Asia-Pacific region, we think value-wise, Japan and the Philippines make a lot of sense. Of course value is absolute as well as relative, and one needs to consider these values from your perspective of value. This I have done, and it has culminated in reports on the Philippines, New Zealand and Japan. If you like the Philippines, you might also like Thailand. Japan has a great appeal to many young and old because of its rich cultural experience, great services and infrastructure. Mind you a great many Westerners these days go to the Philippines for medical treatment on the cheap. I have used one of the private hospitals and they do have experiences, Western-educated doctors. Anyway, the property reports aside, if you are interested in the countries, then I have blogs pertaining to these countries where I explore more of the issues living in these countries.

1. Living in NZ - In this blog I also talk a lot about Australia - my home country - as they have similarities, and people interested in NZ are usually interested in Australia.

2. Living in Japan

3. Living in the Philippines

There are of course other countries where you can live and even buy property, however I find these countries the least restrictive in the Asia-Pacific. i.e. You can stay in the Philippines by extending your tourist visa for 18 months before you have to leave. But they don't mind if you come right back. Its just a question of paying around P1500 per month. You can stay in Japan for 3 months. They will let you extend, or you can leave & re-enter, in which case they will ask questions, unless you have a girlfriend who will sponsor you. I did, and was able to stay there over 2 years. I also worked these on another occasion. Teaching English is a great way to get sponsored to live in Japan...if you have a BSc/BA degree. NZ allows you to stay 3 months, but you can extend for 6 months (which is the mnimum property lease period), and its easy enough to go to Australia for another 6 months if you want to stick around the region. Many young and elderly people live from campervans in these countries.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

The AUD will continue to diverge from the NZD

We can see from the following chart that the NZD is in a long term decline against the AUD. We might ask why, and what prospects are there that this trend could turn around. The NZD:AUD decline since 2005 marks the start of huge capital investments in Australia, which has resulted in Australia's national income and savings surging whilst NZ's has gone backwards. This of course mostly arises due to mining and energy investment in Australia. See chart in Google Finance.

The significant rallies in the NZD that you see in that period relate to rises in NZ interest rates, and the NZ Treasuries efforts to quash NZ domestic spending....which was mostly on the rural batch, as well as the ancillary jet ski, motor bike, fishing boat and jacuzzi which went with it. Today the batch is perceived as a waste of money, courtesy of a change in government policy, which has ceased to reward such lifestyle decisions. Now, a great many NZ'ers are selling their 'sections' they use for trout fishing, or their holiday house by the sea. The market will probably resume however, and the strong Australian dollar might just be the impetus.

Australians have to be asking themselves whether anything is going to change. The answer is Yes, but not for probably another 5-10 years. Why do I say that? Well, NZ has to absorb a great deal of housing debt, so there is not going to be any significant spike in interest rates yet. Australia has even more debt, but far better prospects for paying it off. There will also be a stronger Aust economy, with the prospect of stronger interest rates making it even easier for the AUD to outpace the NZD.

It might not be so evident yet, but I see NZ having its own resource boom in a few years. Why? Well, NZ is a relatively small, unmineralised country. Its rocks simply have not been around long enough, and the mineralised core from the current mountain building will not be exposed for another 10 million years. The country does however have large tracts of maritime territory. In fact its the size of the EC. This maritime territory is known to possess vast resources of methane hydrates. In addition, these offshore sedimentary basins may contain vast oil & gas resources. They have not been significantly tested. Even NZ's sole producing basin - the on & offshore Taranaki Basin has hardly been explored, particularly at depth.

It was only last year that the country commissioned a relatively small oil & gas field called the Tui field. The impact of the field on NZ's terms of trade were significant, despite its small size. The Chinese, Indians and others are going to be looking for cheap energy inventories in future years. With access to such resources tied up by major oil & gas producers, extorting high prices for their products and resources, its probable that places like NZ are going to attract a greater share of the exploration dollars, and some of this will lead to success. A significant find is probable, and for a 4.3mil population, its probable that it will make a big difference, not only in pushing up the currency, but by stimulating interest in NZ's offshore basins, which will attract even more interest.

This will take 10-20 years to unfold of course. The implication however might be significant if you perceive NZ as a nice place to retire, or to buy a holiday house. In the short term, the NZD is certain to continue its fall, but it might be a good idea to consider these factors when considering retirement in NZ. In the short term however:

1. NZ immigration is mostly outwards to Australia - that is - Australia's is growing faster

2. Australian export volumes and prices are fairing better - even though NZ milk and timber is doing well

3. Australian business investment is phenomenable, NZ lacklustre

4. Australian savings are far higher

5. AUD will out-perform the NZD for the next 5-10 years, so expect the NZD and AUD gap to continue its divergence

6. Thereafter (say 15-20years off) you might expect the NZD to recover, and do rather well based on my expectations for the recovery of methane hydrates and conventional oil & gas offshore, as well as the mining of coastal titanomagnetite (titanium-rich iron ore), which will by that time be far more strategically important. Currently Ti-Fe is hard to separate and use, and the appeal of high strength steel alloys is only just starting to take off. NZ deposits are relatively remote, so early mining will be of Chinese, PNG and Russian deposits.

The other important factor when you make these Aust-NZ comparisons is to consider the extent to which NZ will benefit from integration with Australia. The issue of course is that NZ is a lovely place, but nothing happens here. If we want to look at what difference greater integration is going to make, then we only need look at South Australia. Does it benefit from being part of Australia? Not significantly, because like NZ, its a small population remote from the rest of Australia. And NZ is split into two islands, so its like two Sth Australia's. Australia is very much concentrated on NSW, Victoria, Queensland and WA. The other states are really mere appendages to the demand created by these states, whether its in existing population or population growth-related demand.

The appeal of NZ integrating further with Australia is mixed. It will make a marginal difference to NZ's competitiveness, but at the same time it will make it easier for NZ'ers to go overseas to capture some of that income disparity. Of course they can always come back to NZ in around 12 years time (to retire) when the currency bottoms against the AUD. The big difference for NZ will come from access to Australia's capital markets. Already the countries are talking about integrating their respective legal systems. This will make it easier for the countries to jointly regulate and administer business. This will make it easier for Australians to buy property in NZ, and it will make it easier for NZ'ers to invest in Australia, giving them access to a broader variety of investment opportunities. The appealing aspect of this is access to mining investment opportunities, and probably technology investments, as well as helping NZ technologists to finance their developments given the lack of savings in this country. This will of course aid NZ financial literacy....which has already been favourably impacted in Australia by compulsory superannuation, and most particularly a plethora of privatisations there. In NZ, the bulk of the funding for privatised assets was offshore.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Earthquakes - Lessons for property buyers

In our latest Japanese foreclosed property report we have added a great deal of information to assist you to avoid the damages caused by earthquakes. Japan is amongst the most unstable or active in the world, alongside places like Papua New Guinea and Indonesia. We also have a NZ property report, and since there was a recent serious earthquake in NZ, we thought we would offer some general public information to assist property buyers. I have some understanding on this issue since I studied geology and geophysics at university in Sydney.

There are some basic issues to understand:

1. Earthquake risks are not always understood because fault lines are not always know. This is because modern human records cover a far shorter period of time than geological processes. Active or previously 'inactive' fault zones can be concealed by recent sediment cover. This is true of the Kanto plain, as well as the Canterbury Plains of NZ.

2. Earthquakes can be zones of weakness, and perhaps not just a single plane of weakness. It might be better to consider them 'crimple zones'. They comprise jagged lines of weakness with zones of intense distortion as well as zones of dilation, where stresses vary from weak to intense depending on the competency of the rocks involved.

3. Earthquake risks are not equal for different regions. Competent basement or foundation rock provides greater security than loosely consolidated sediments. For this reason, thick piles of sediment pose greater risk

4. Unconsolidated sediments pose particular concerns where they are water-saturated, i.e. In areas of high rainfall or low-lying areas. In these cases, sentiments in the 'crimple zones' can undergo liquefaction, in which case they lose all strength and behave like a liquid. This can result in the foundations of your house sinking into the soil in the earthquake zone.

5. An earthquake zone can be a broadly-defined, as is required to relieve the stress. i.e. It is common for a transform fault like in NZ to involve multiple faults, with the outer faults defining the fault zone.

6. Those regions which were historically active for earthquakes might not adequately define zones of future vulnerability. For the reasons already mentioned, old zones of faulting might be concealed by extensive flood plains, as was the case with the Christchurch earthquakes in Sept 2010.

7. A serious earthquake can result in a large number of houses being heaved off their foundations, which are contorted by the ground movement. The houses can sink into the soil, and its common for any brittle structures to crack and fall into the house, i.e. In Christchurch, most brick houses in the fault zone were destroyed as they crack up. Chimneys made of brick often toppled into the structure, posing a risk to residents. Most of these houses need to be demolished and newly built, even if they look fine from the outside. The door hinges might not work properly because of the distortion, just as your car hinges can be poorly aligned after a car crash.

8. Different countries have differing levels of preparedness for coping with earthquakes. Japan is far better in this respect than NZ. Avoid brick homes in NZ, even though they have increased in popularity. The old weatherboard and modern galvanised sheet homes probably make the most sense. Houses on concrete pilings (i.e. posts) rather than concrete slabs make the most sense, though that ultimately depends on the thickness of the foundation, the size of the slab, the competency of the host rock, and the saturation of any unconsolidated sediments. Avoid low-lying areas with unconsolidated sediment foundation.

In the Japan report, I offer a map showing regions of vulnerability to earthquakes based on the Japanese governments analysis. For NZ, there is a transform fault going up the centre of the South Island, and up through Wellington to Hawkes Bay on the North Island. The Taupo Volcanic Zone has not historically been an area of intense earthquake activity, though it is active as well, since that zone is spreading apart at 10cm per year. There is a fault going down to Wanganui City (population 40,000). This region experienced a 5.1 earthquake in Aug 2010.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

Author Andrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Table of contents for 2010 property reports

For interested persons, we have moved our table of contents for our 3 latest eBooks pertaining to:

1. Japanese foreclosed properties - looking at the court-administered foreclosed market primarily as this is where the big opportunities can be found at huge discounts to private sales.

2. Philippines property - foreclosed and more typical counterparty deals

3. New Zealand Property - normal industry trade sales. Foreclosed properties are handled through the normal market mechanisms.

NZ Property Guide Philippine Real Estate GuideForeclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Premium NZ property anyone?

Harcourts NZ, the local property brokers, have flown company representatives over to China and Hong Kong in order to sell a package of high-end NZ properties. NZ is of course an appealing market because of its idyllic natural environment, however given the small size of the local economy, during an economic squeeze like the current recession, it is often difficult to find buyers.

Prospective buyers will need to contend with the local foreign investment restrictions. Among the properties available for purchase are:

1. Private islands

2. Agricultural properties

3. High end residential apartments

Prospective buyers might be interested in our report on the NZ property market.

NZ Property Guide Philippine Real Estate GuideForeclosed Japan GuideAuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Comparing NZ and Australian property markets

St Arnaud Lake, South Island, New Zealand

Here are 10 good reasons why not to buy property in NZ by Bernard Hickey at the NZ Herald. I might add a few more if it pleases you, as well as some good aspects:

More bad news

1. Food prices will perform well in future, though I think Australia will do better with food, minerals and heaps more minerals. Australia kind of has a global monopoly on coal & iron ore development. I can probably identify 60 projects in Australia which have the capacity to last 30 years. There is just so much ore. Even the crappy 30%Fe can be processes simply for 55%Fe. Its not to far from the coast, and there is good infrastructure, and foreign buyers of the stuff prepared to spend money to develop it. There is going to be a lot of money going into Australia. Meanwhile, the Chinese are trying to buy into NZ farming, and voters are strongly against it. So don't expect much foreign investment in NZ.

2. NZ just doesn't have much of a selling point to attract investment. Unless you are a niche medical technology developer, a graphic design or web-based business, you are likely to struggle getting business on the international stage. Its expensive and time-consuming to get to NZ. So is NZ destined to be just a 'retirement hub' where people come to die? I think so.

3. The government finally looks to be doing something about welfare dependence. There are 386,000 NZ'ers on welfare benefits receiving a total of $6.5 billion a year. The biggest rout seems to be single parenting. There 100,000 single mothers who have 180,000 kids among them. No doubt most of them care less about working, and most are going to be terrible role models, embedding an 'inter-generational' culture of welfare expectancies or dependence. The problem is that NZ really has to create jobs for these people.

4. The government is actually making NZ less attractive for retirement by increasing the GST to 15% to fund tax cuts. Having said that most retirees are living on foreign income, and that translates well into low-priced NZ dollars.

by Andrew Sheldon

Some good news

1. There is actually the prospect of some low-income Australians retiring in NZ in coming years in order to benefit from cheap housing and falling airfares. This will also have a benefit for Australians travelling here for tourism, and buying holiday houses. In NZ you can buy a holiday house for $NZ80,000 ($A65,000) near the beach, in Australia they start at $A350,000.

2. Some of those NZ'ers working in Australia's mining industry are going to come home to NZ. Particularly if they are working in the mines in WA, where they are less likely to meet girls and settle in the country. They might thus be more inclined to save and return to NZ with a nest egg.

3. The Australian population is growing so much faster than NZ, 2% compared to 0.5%. There is a flipside however. Australian property is highly regulated. You have 21 million people sharing a continent slightly smaller than China, and it restricts urban land releases, which keeps prices artificially high. Subdivision is very difficult in Australia, even in rural towns. This is because local & state governments don't want to fund infrastructure, whilst also allowing 'tax creep' based on property prices. In NZ you can buy property or 'sections' in rural areas, in town for as little as $30-60K, and you can stick an old relocatable home on it for $50K (including expenses), or build a new one for $120,000 plus. In Australia, to benefit from those dynamics, you will need to live over the Great Dividing Range on the Western Plains, some 1000km away from Sydney, and maybe 60km from a large town, in something resembling a 'ghost town' which has lost all its services. You will be pleased when it rains, because that will be the most exciting thing that happens.

Northing else I can think to add. I think it was a good article. Basically I conclude:

1. If you have money or want to make it, you live in Australia

2. If you have money and want to leave it in your home country, you live in NZ

3. If you have no money and no desire to make it, no one wants you.

------------------------------------

NZ Property Guide Philippine Real Estate GuideForeclosed Japan Guide

AuthorAndrew SheldonApplied Critical Thinking | www.SheldonThinks.com

Interesting property markets

New Zealand (North Island, countryside)

There are several appealing markets in which to buy property. Among the markets we cover, we consider the best buying to be the Philippines for capital growth, as well as satisfactory yield. Japan offers compelling yields, however there is less prospect of much capital growth in the medium term. Mind you, since the government will likely resort to printing money in order to pay off the public sector deficit, expect some nominal price increase in property and equity assets, but of course that will be inflation-based. They might however be offset by higher property taxes and a GST increase. I see no new taxes in the Philippines, just higher compliance measures. Despite high nominal taxes, people in the Philippines pay amongst the lowest taxes in the world, i.e. 16% of GDP. Its a good deal if you can scam it. Don't be a proud taxpayer....most of your taxes goes to corrupt people, or serves inefficient purposes. You are the best custodian of your money. No one respects it as much as the person who earned it. That which was well-spent you would have been happy to finance if you had a choice. Don't believe you had a choice when you voted in the last election. You have no real or effective choice.

The NZ property market is less appealing at the moment. The currency is consolidating around 0.70 USD and there is the prospect of rising interest rates constraining price growth. Equally problematic is the exodus of NZ'ers to Australia. NZ population growth is just 0.5%, with the exodus of NZ'ers balanced by Asian and other immigrants.

Some commentators are expecting a collapse in Australian property prices. Frankly, I don't see it when the economy is supported by a lot of commodity projects and immigration. Expect business investment in the mining & energy sectors to remain strong. The Resource Rent Tax interestingly will hurt, particularly if they talk about it, then decide to defer it, or not do it. It will leave investors in limbo.

Another positive is the tight housing supply. There is no doubt this is due to the hefty increase in immigration. Immigration to Australia has risen from 100,000 in 2004 to almost 300,000 today. It was doubled from 2007. Clearly the government saw immigration as a means of avoiding recession. It looks like the govt wants to use immigration and mining taxes to finance the retirement of babyboomers.....as opposed to doing what it ought to do....removing the cap on private sector activity. By cap I mean the excessive involvement of government in the economy...stupid arbitrary statutory law, subsidies, welfare transfer payments, etc. Sound idealistic? Well, you would be surprised how counterproductive these measures are at remedying problems. Government solutions are the problem.

1. Housing affordability a dream? Blame the arbitrary restrictions of government zoning which prevent land lot availability.

2. Can't get a job? Blame government cumbersome planning approvals, and most particularly public infrastructure funding and minimum wage limits.

3. Can't make money in a volatile investment climate? Blame government for distorting 'free' markets to ensure they get elected. They don't care if they channel billions into wasteful, unproductive investment, just as long as they get elected.

4. Can't find good workers? Blame the public education system which offers a low-standard for the private sector schools, which fake it, and sell their reputation.

5. Can't even make good friends? Blame a political culture which sets the standard in self-delusion, political correctness and subjective value judgements. Same for forging lifetime relationships. Divorce rates manifestly come from the same problem.

NZ Property Guide Philippine Real Estate Guide Foreclosed Japan Guide

AuthorAndrew Sheldon Applied Critical Thinking | www.SheldonThinks.com

Regional property market outlook

For those of you interested in property in the Asia-Pacific region, consider the following news with respect to each of the markets we cover.

1. The Philippines property market prices appears to have bottomed according to Global Property Guide. This company relies on a number of indices produced by Colliers International. You can view their quarterly market report at Colliers. Based on other posts I have made about the Philippines, I have a lot of confidence in the nation's fundamentals. This is of course evident from the latest edition of our report.

2. Japan Property Market has never really recovered so if you are looking for a turnaround story then Japan might be a place to consider. The prospect of reform-minded government is looking less likely given the controversies which have put the alternate government (i.e. Democratic Party of Japan) on the back foot. The country does however remain a great place to live and work, and the foreclosed property offerings at huge discounts make it an appealing option. The fundamentals are deteriorating, though the foreclosed market is still trading at huge discounts for anyone happy for property more than 1 hour from the largest cities.

3. New Zealand Property Market is still to find a base in the cities though you can find cheap property in some rural areas. The exchange rate for NZ and a number of commodity based countries makes this market less appealing, except for the committed retiree who can loan funds locally. In any respect this is not the time to transfer assets to NZ, or to buy property generally.

NZ Property Guide

Philippine Real Estate Guide

Foreclosed Japan Guide

Author

Andrew Sheldon

Applied Critical Thinking | www.SheldonThinks.com

Properties in NZ for Australian retirees

The cheapest places to buy property in NZ are probably the places you would least likely want to live. For example, driving through Murupara, NZ, I have sympathy for the people trying to sell a house there. Not so much that I wouldn't discourage you. The south too is isolated and colder, which might scare off buyers. The far east coast of Gisborne is a little remote.
The cheapest places you might consider are Wanganui and Taumaranui on the North Island and Oamaru on the South Island. I would be inclined to research the level of crime for Taumaranui, however Oamaru and Wanganui have a lot of appeal and decent priced houses. These places offer good buying because they have experienced depopulation. This might scare off investors, but for retirees, they offer attractive entries into the market.
In fact the opportunities to buy will only get better. We watch the number of properties for sale in Wanganui and the numbers just keep growing. There are several reasons:
1. Property prices are falling in real terms in some areas, or otherwise consolidating in growth areas as rents rise
2. Investment properties are being talked down by the government intent on taxing them
3. Depopulation is rife - not aided by a weak NZD relative to a strong AUD
4. Strong mining investment in Australia, which keeps taking New Zealanders offshore

This of course makes NZ good buying for Australians, though there are few places like Wanganui where I would rush in. I would suggest taking advantage of the strong AUD in coming years. Here are some pointers to the local value. It will only get better.
1. www.trademe.co.nz/link.aspx?i=12121&id=276780398
2. www.trademe.co.nz/link.aspx?i=12121&id=268402395
3. www.trademe.co.nz/link.aspx?i=12121&id=276591749
4. www.trademe.co.nz/link.aspx?i=12121&id=278200693

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Tools for researching property in NZ

If you are interested in researching property in NZ, there are several useful online tools you can use. The best tools are:

1. Online Statistics NZ interactive database - see their online portal. The attraction of this page is that it allows you to scan the income levels of each district and sub-region, and to focus in upon specific areas. The attached diagrams provide examples of the detail. You highlight an area to get basic statistics, and then click on the 'Quickstats' hyperlink to see a more detailed breakdown of information on the district's proportion of education qualifications, incomes, age, employment, housing, etc.
2. Google Maps - This is a useful tool which provides more research about the house you are about to buy. Consider the power to search into people's backyards. In NZ, this feature is useful for identifying bad neighbourhoods. ie. If you see a lot of cars in a backyard, they are probably wrecks. If you see several caravans, they are unregistered, unemployed people. Of course in the right neighbourhood they can attest to a car with several cars and recreational time (usually retiree minded).
3. REINZ Housing Price Index - see the REINZ website for further information.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian property is hot, NZ is not (yet)

Property prices are likely to come under pressure in rural areas of NZ as a result of depopulation. The weakness of the NZD relative to the Australian dollar is likely to give encouragement to more New Zealanders to move to Australia. There is some $300 billion of mining projects to be developed in Australia over the next 20 years, and this will underpin a very strong economy thanks to the commodity demand of 2.5 billion people living in China and India. Property for this reason looks very good in Australia. Those areas likely to benefit most are Perth and Darwin (because of their role as a service centres to mining & oil industries), plus anywhere from along the Queensland coast.
The argument will be made that Australian property is overpriced. That is true, but the strength in the economy and restrictions on urban development mean that those characteristics are going to be retained. Regional coastal areas however look more attractive. The influx of people from NZ will help, but I would suggest to you that the movement might just go both ways. i.e. The weak NZD relative to the AUD will attract NZ'ers to Australia to earn income, but it will also draw poorer Australians to NZ for retirement or holiday (houses). Deregulation of the airline industry between Australia and NZ is likely to aid that process.

In the short term, I would keep an eye on the number of homes for sale in rural places. i.e. Watch online listings in each rural city. The main cities tend to have more growth, so they are still expensive, and will not offer the attractive discounts, however rural areas like Wanganui, which suffer depopulation are likely to turn around at some point. This has already happened in the Southland area, an area that has good access from Queenstown. Wanganui is similarly well located between Auckland-Rotorua-Wellington, and is perhaps the nicest town in NZ, offering full services to retirees. Its weather is reasonable, though it is a little windier compared to other places. It has reasonable sunshine hours. There is less wind on the Bay of Plenty and East Coasts.

NZ Property Guide
Philippine Real Estate Guide
Foreclosed Japan Guide
Author
Andrew Sheldon
Applied Critical Thinking | www.SheldonThinks.com

Australian opportunity in NZ property

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 factors 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

Big boost for NZ property market!

There are some important developments occurring in the OCEANIA region. It looks like Australia and NZ are moving inextricably closer together thanks to a desire by the PM's of these countries to boost economic activity. I guess they need to look busy during a recession, and no doubt they will welcome the opportunity to make some landmark decision during their 'reign'. Certainly the decision makes economic sense, particularly for NZ, but in absolute terms for both countries. I have written up a blog on the finer points, but importantly one can expect these developments to be a boost for NZ property prices. See my NZ blog.
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Andrew Sheldon www.sheldonthinks.com

The best property markets in the Asia-Pacific

There has been a bit more interest in our Japan Foreclosed and Philippines Property Reports of late. More interesting perhaps is the shift in the types of buyers. I detect greater interest from professional investors in Japan, as opposed to most buyers who are foreigners married to locals.

There is less interest in New Zealand, which is understandable given the recession, and the changes to the NZ immigration classifications, and all-round job losses. The strong $NZ is neither helping the economy, nor providing foreigners with the incentives to invest there. We are not complaining. We bought property there when the forex rate was 50-55 USD, now its 67c, so all is good. Property at the bottom-end of the market, where we bought is holding up well, and I expect inflation to keep it that way. On our side, there have been no more drive-by shootings, which has kept property prices higher. We are hoping that the thieves who took the water heater have not come back, as we are currently in the Philippines. The missing water heater no doubt drove a few customers away, and allowed us to get a real good price. Top that off with the fact that when we bought the outlook was particularly bad, and the 70's plus couple were probably looking at a repeat of the Great Depression, which they would have heard tirelessly about in their childhood.
I am also encouraged by the appointment of a right-wing politician Don Brash to a productivity inquiry. The government is keen to catch up with Australia.
In Japan we bought a property which is not in a "Urban Designated Zone" though given the level of housing construction in this valley in the mountains west of Tokyo, we are expecting a re-zoning in coming years, and a shift to town water/sewage supplies. We are comforted by the construction of high-value 'lifestyle' townhouses on the hill for Y30mil a piece. That should help our property purchases for just Y2.8mil. I provide more property buying strategies in our Japan Foreclosed book.
In the Philippines, we are also happy to report that our properties in Lipa City are looking good. Lipa is a growing city with a lot of promise. It is well located between Manila and Batangas. Great for foreigners who like to go to Puerto Gallera. It has the attraction of a cooler climate since its at an elevation of 400m, and there are areas which are even higher. It has three shopping malls, though I must say its still "franchise city". There have been some attempts to establish higher-end restaurants, but each has failed. I was particularly fond of the Korean restaurant. Fortunately there is now a new Savory franchise in SM Lipa which actually makes franchise food particularly tasty.
We are most pleased with our investment in Lipa. Both properties were foreclosed property purchases. One was in an upmarket subdivision. Not the typical place we would normally buy, but were were looking to buy something secure we could live in and store stuff whilst overseas. We got such a good price - P2700/m2, when they are selling them onsite for P4500/m2.
The prospects for the other property are even better. We understand that a private school developer is negotiating to buy a foreclosed lot on the highway near ours, so this should add to the value of this property, and step up the pace of local development. I have long believed this area would have a small shopping precinct, and I believe that the single entry/exit into Lipa City, which is congested now, will result in a diversion to take the pressure off the existing road.
The extension of the tollway is shown in red, my expected connectors are shown in green, and our hot spot is shown by the pink circle. There are a number of other attractive features. There is talk of the Fernando Air Base being used as a commercial freight facility. If this facility does indeed great converted into a commercial facility it will do a great deal for land values because the grounds of the Air Base are phenomenal. Nicest gardens around. This would make great facilities for high-end accommodation and/or restaurants. Its hard to envisage another shopping mall for another 10 years, but this also would be a good place for it. The Philippines population isa growing by 2% per annum, and given the rising industrialisation, more people are heading to commercial centres on the fringes of Manila. Manila is too congested. Filipinos care about their lifestyle more than anything else. Which is why call centres are being established in satellite cities like Lipa. The implication is that Lipa's incomes can be expected to grow quickly, as the population grows quickly. I don't even expect the recession to reduce remittances, nor do I expect much decline in call centre developments in the Philippines.
As I anticipated a year ago when I released the Philippines property report, the Philippines market is remaining one of the most prosperous places to invest. Given the Chinese-based heritage, I think you can expect a lot more Chinese investment in the nation as well. Japanese and Korean retirees will also feature. Where do you think these Korean and Chinese holidayers will retire as they age. Remember it is the old people with the money, the children want to live in the Philippines to learn English on the cheap, and to escape their discplinarian parents. The dynamics are on the wall. The Philippines will be the next tiger economy. Mind you the pickings are getting pretty slim. Pretty well every other economy has taken off. There are many other reasons why the Philippines is appealing. e.g. Its the only Asian country with generous visa conditions. You can stay in the Philippines for 18 months without leaving the country. That's just as a normal tourist, hence most people don't even bother with a retirement visa. For further information check out our 2-volume eBook set on Philippines property and receive a free list of Philippines bank foreclosed properties.
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Andrew Sheldon www.sheldonthinks.com

NZ property market outlook

Here is a good blog post if you are interested in the NZ property market - and questions of when to buy. See blog.
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Andrew Sheldon www.sheldonthinks.com

Tax benefits for foreign investors in NZ

In 2006 the NZ government made changes to the New Zealand’s income tax code which make immigrating or resettling in NZ particularly attractive for foreigners. New residents will be able to have an exemption on all foreign earnings for four years. This does not strike me as a particularly sensible law because the recession will last 4 years, so people might be prone to just leave the country in 4 years. But hell - who doesn't love a tax break!

New immigrants to New Zealand qualify for the automatic tax exemption on their individual overseas income under the Taxation Act 2006. The tax exemption is targeted to encourage prospective migrants to consider New Zealand as a viable and competitive place to live and work. The exemption also applies to returning New Zealanders who have not been resident for tax purposes for at least 10 years before their arrival.

It operates to exempt all “transitional residents” from New Zealand tax on their foreign-sourced income by treating it as being derived by a non-resident. A person will be deemed a transitional resident if on or after April 1, 2006:
1. They have a permanent abode in New Zealand, and
2. Immediately before acquiring that permanent abode, they were continuously non-resident for at least 10 years, and
3. They have not previously been a transitional resident.

It is possible for a person who has visited New Zealand before acquiring a permanent abode – for example, to attend interviews or to look for housing – and who would otherwise be deemed resident in New Zealand (because they had been in the country for more than a total of 183 days in any 12-month period) to benefit from the exemption.

The transitional resident status will last for four years, ending on the last day of the 48th month after the month in which the person acquired a permanent abode in New Zealand; or the day the person ceases to reside in New Zealand. After expiry of this period, the person is treated as a resident, and their foreign-sourced income becomes liable to income tax in New Zealand.

The only types of foreign income not tax exempt in New Zealand are those derived from overseas employment performed while receiving the exemption, and business income relating to services performed offshore. All other foreign-sourced amounts (including interest, dividends, and employment and bonus income from previous employment) derived by the transitional resident are exempt.

The new legislation also provides that, where a settlor of a foreign trust becomes a transitional resident in New Zealand, they or any beneficiary or trustee of the trust will now have up to five years to elect for the foreign trust to become a qualifying trust. A foreign trust means that no settlor is resident in New Zealand from when the trust is settled until a distribution is made. A foreign trust is not required to pay New Zealand tax on its foreign-sourced income. If the election is not made, the foreign trust becomes a non-qualifying trust, with distributions of accumulated income or capital derived taxed at a penal rate of 45 percent. Previously, if a settlor of a foreign trust became resident in New Zealand, any of the settlor, trustee or beneficiary had only one year to elect to convert the foreign trust into a qualifying trust.

This tax concession makes 'sleepy NZ' a great place to hang out for the next 4 years of the recession. For more information refer to our property report.

Aust-NZ common market will drive property prices

The leaders of Australia and NZ - PM's Kevin Rudd and John Keys - have moved a step towards a common market which will reduce the cost of flights between Australia and NZ. The steps to be taken in the next year will see trans-Tasman customs and immigration abolished, so an entry into NZ is essentially an entry into Australia. This will spell a travel revolution for Australia & NZ, a property boom in areas, but it could also be expected to cause a flight of more people and jobs from NZ (in general). It will mean more tourism for NZ though. The implication is clear:
1. NZ Property around airport hubs like Christchurch, Palmerstown North, Dunedin, Wanganui, Hamilton are going to get a lot more expensive.
2. Queenstown-Wanaka are going to benefit the most because of its tourist icons and restricted land because of its mountainous geography.

The operating costs on trans-Tasman flights will fall by at least 30% and expect an increase in the number of new routes being flown. Jetstar says the savings for the airlines will be about $60 a passenger one-way.Typical prices can come down from $200-$210 to $140-150 [one-way]. Even greater reductions are possible by using the smaller airports. New destinations could include Avalon (Melb), Newcastle and Hamilton in Australia side and Hamilton, Palmerston North and Queenstown in NZ. The implication is that NZ property is looking very attractive for Australian buyers.

The common market is motivated by NZ's desire for greater access to the Australian market, as well as the airline's desire to stimulate travel by removing the government imposts (extra airport charges and government taxes) that don't apply to domestic travel.

Bruce Buchanan, the CEO of Australasia's low-cost carrier, Jetstar, has been a leader in the campaign to integrate the two countries aviation industries.

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Andrew Sheldon www.sheldonthinks.com

'Buying NZ Property – Download the free sample readings!

The NZ property market is shaping up as one of the most attractive property investment markets for the next few years. High yielding property and the collapse of the NZD make NZ the perfect counter-cyclical investment if you buy right! In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

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NZ property fundamentals looking stronger

The more the NZD falls the more compelling this market looks. We have long been believers in the contrarian investment philosophy which involves recognising under-loved markets and investing when things look worst. The rationale is that when things appear at their worst things can only get better because all the bad news has been priced into the market.
Clearly with the ARM mortgage resets in the USA only just starting to feed through the US market, we will be looking at more bad news in the USA. Its unlikely this bad news has been fully priced into the market. This might actually be the news that drives the NZD to 40c USD. Why? Because when thew US stumbles, the NZ and Australian currencies tend to suffer as 'growth' associated economies with weak internal demand. This perception is actually flawed in the sense that weaker local currencies increase local receipts from US export earnings. This is the great aspect of the Australian and NZ economies, that they have this wonderful currency buffer in bad times. For this reason I suggest any move to 40c will be a magnificant FX trading opportunity, whether its the currency you solely play, or whether you are buying NZ property.

The compelling attractions about NZ at the moment are:
1. A current account deficit of 9.6% - which can only improve in a time of global uncertainty
2. Free trade agreement with ASEAN nations - this in itself is a positive indicator that Asian nations are not protectionist in these difficult times
3. Greater integration between Australia-NZ
4. Strong food export receipts for NZ - as commodities are denominated in USD
5. Improvement in NZ savings rates
6. Increasing tourism - the low NZD will make NZ a preferred destination for international travellers. Perhaps the other strong aspect in hard times is the ability of NZ to offer cheap travel options for backpackers.

I visited some business colleagues last weekend in Ruepehu. In the town of Taihape the largest bar-restaurant is in foreclosure. This is a wonderful opportunity to develop an external tourist market for this property because this is a town with a wide range of eatery options. What it needs is better marketing. The owner of this property over-capitalised in the property, but has under-invested in developing tourist links. During this period of low dollar, there could be no better opportunity to buy this property for foreigners or NZ expatriates. This place stands in the shadow of Mt Ruepehu. It has access to whitewater rafting, the skifields, jet boating, and its situated between Auckland and Wellington. It strikes me as a good investment!
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Andrew Sheldon www.sheldonthinks.com