We were limited in our options here and venture overseas to invest in properties
Joint home ownership is an aspiration for both Sarah & Rebecca
We want a sense of joint ownership in a home
Sarah and Rebecca have been together as a couple for many years and through their professional careers, they have accumulated some savings which they wish to invest in a property. Sarah owns a resale HDB in Singapore which they have been living in together for more than 6 years. It's a perfect abode for them and their little pet dog, with the HDB being conveniently located near their workplace and amenities. They planned to keep their HDB as their primary residence in Singapore as they knew it would be tough to buy back a HDB at the price they paid for in the location they desire.
With the pool of savings sitting in their bank account and losing its value to high inflation, they were on a hunt for property investment options as they felt it was a safer way to grow their wealth and as an asset that they both could co-own together. When Sarah bought the resale HDB 6 years ago, Rebecca was not added as a legal co-owner as she did not qualify for the min age to buy as Joint-Singles then. They hoped to be able to buy a property together so that both could have a sense of home ownership and also anchor their future plans as a couple in a stable investment.
ABSD stopped us in our tracks during our search
They were dismayed to discover that should they buy and co-own a condo here in Singapore, they will be subjected to a 17% ABSD tax (now 20% as of 2023 update), on top of the high deposit requirement, as this would be counted as Sarah's 2nd property. A 1.2m condo they were looking at would require them to cough out more than $500,000 to pay for the deposit and taxes. This would drain their savings considerably as the total capital outlay would have exceeded their budget. While it is still within their affordability, they were hesitant as they wanted to be prudent and not over stretched their finances and are not prepared to adjust their lifestyle to accommodate the high cost of a 2nd property in Singapore. They often quarreled over this and even entertain the thought of Rebecca buying it alone in order not to incur ABSD but quickly realized that's not possible as she is listed as an essential occupier in the HDB they are living in. Even so, they did not want to compromise on their goal of investing in a property together and growing their wealth as a couple. They also find paying for such hefty taxes makes the investment way less attractive, and wonder how long it will take before they can see some returns.
Turned our eyes to where I proposed to her: New Zealand
They turned their eyes to overseas property investment options, which they hoped would offer a more affordable entry point with less stringent taxes and regulations. When they recalled a road trip they had taken in New Zealand years back, they jumped at the idea of buying a property there.
During our coffee chat, they excitedly told me:
"We so loved everything about New Zealand - the friendly people, stunning landscapes and the chill lifestyle. It is also the place where I proposed to her, so it has a special place in our hearts. We even thought of relocating there but due to our careers then when we were younger, that wasn't an option. This might just be the perfect destination for us to co-invest in property and potentially be a stepping stone to our future relocation plans"
New Zealand has a welcoming attitude towards the LGBT community with equal opportunities
What caught their attention is also that New Zealand has long been considered one of the most LGBT-friendly countries in the world, and it's no surprise that many same-sex couples are choosing to come here to live and work. The welcoming attitude towards the LGBT community is also heartening to them as a couple, and they could see how life could be quite different should they have an opportunity to move over.
As we talked, they were delighted that New Zealand itself presented an amazing opportunity for them to invest in property, not just because of their personal affinity for the country but also due to the promising returns that property investment can bring. They were shocked to know that there is no stamp duties payable even for foreign buyers like themselves, saving them a huge amount of money compared to the taxes they would have incurred in Singapore. They are also not liable to pay ABSD here in Singapore for buying a NZ property as the property count is only applicable for local properties. More importantly, they now have a chance to co-own a property as a couple that is well within their budget and comfort level. To them, that was the best thing.
They also like that New Zealand offers a stable and transparent legal system, making property investment safer and more secure. They found the market a hidden gem, and has been providing consistent and robust capital growth for investors over the years, with house prices rising steadily in the range of 7-9% per year. To them, it is nothing less than what they could have achieved in Singapore, performance wise. In fact, they would have a better chance of turning a profit faster due to the absence of stamp duty charges and favorable market conditions in New Zealand.
Buying brand new works for us
Buying brand new allows gives them the peace of mind especially when they do not yet live there
Eventually, after several rounds of discussions and working through their financial plans, they settled their first property on a brand new townhouse in Christchurch. They wanted to catch on to the long-term trend of townhouse popularity, and buying it brand new meant that they did not have to worry about any major issues with the house for a long time. Being busy professionals, they knew this was the best way to get started as they would not be able to devote time to undertake any renovation works and rectification should they opt for the resale market. Through our conversations, they also learned that buying Brand New improves their overall ROI as it is more tax efficient with the current new policies that incentives purchasers of New homes.
Ever since their property is completed, their property manager has found them a pair of local tenants (after the usual screening and background checks) from which they have been receiving rental income paid into their bank account every fortnight. In the last 2 years, they never had a missed rent and the whole process was hassle free which were extremely important to them. They were impressed with the whole process from start to finish and are now even more convinced that New Zealand offers significant advantages as a property investment destination.
With the property price quantum in New Zealand lower than that in Singapore and not having to budget for any stamp duties at all, coupled with the help of financing options, they had surplus funds and managed to buy their 2nd investment property shortly after the first and plan on to buy their third when the opportunity comes around.
They were happy with the entire journey and look forward to their future plans together. Looking back, they were glad that they made the decision to invest in property in New Zealand as it gave them a chance to co-invest in a property together and grow their wealth, with the additional benefit of an alternative residence.
Should I Invest abroad, stay put or wait?
If you are reading this, you are probably wondering what your next best steps in your investment journey could be.
Perhaps you are in a similar situation on your property journey? Will New Zealand market be a right fit for you and your family? Is this a good time to buy an overseas property, or should you wait and see?
Well, everyone’s situation is different. There is no one size fits all advice. What has worked for someone, may not necessarily work for you.
At Brickzwealth New Zealand, our aim is to bring clarity to your investment decisions with extensive on the ground experience for the overseas market.
Whether you are a first time property investor or a seasoned buyer with a portfolio, we are here to provide an honest and objective view to your investment journey.
We can help you by:
1) Providing Strategic property advice that best fit the outcome you desire
2) Identify & spot investment opportunities that align with your goals
Kick-start a conversation with us today. Invest differently. Inspire your future.
Ryan Quah
Founder
Brickzwealth New Zealand
