What are the differences between the NZ property market and the Singaporean market?
Why would someone from Singapore invest in New Zealand rather than in their home country?
Even though Singapore and New Zealand are among the world’s most unaffordable property markets, according to the Demographia International Housing Affordability Report, there are six key differences between the two.
Together these make New Zealand a more attractive place to invest, compared to Singapore. Here are those six differences:
#1 – New Zealand doesn’t have Stamp Duty
Stamp duty is a type of property tax that many Kiwis aren’t familiar with … because it doesn’t exist in New Zealand.
Singaporeans, on the other hand, have to pay stamp duty when they buy a property. Just how much depends on whether it’s your first, second or third property.
It also depends on the purchase price of your property.
For example, if you buy a S$1 million property then you will need to pay the government S$24,600 … just to buy the property.
That’s 2.46% of the purchase price.
And the stamp duty gets extremely high when purchasing additional properties.
If you purchase a second property in Singapore you then have to pay Additional Buyer’s Stamp Duty (ABSD). For a Singapore citizen, that's an additional 20% of the purchase price.
So, on a S$1 million property, you'd pay S$200,000 in ABSD, plus S$24,600 in normal stamp duty. That's S$224,600 in total.
For your third property, the ABSD increases to 30%. So you'd pay S$324,600 in total stamp duty on another S$1 million property.
So, if you were to buy three S$1m properties (and you don’t own any today) you’ll have to pay: S$24,600 on your first property + S$224,600 + S$324,600 = S$573,800 just in stamp duty.
To just break even across those three properties, they’d need to go up in value by about 19.1% … just to account for the tax.
On top of that you’ve got to pay the government this money up front. That means it can be expensive to get started as an investor in Singapore.
However, in New Zealand there is no stamp duty or Additional Buyer’s Stamp Duty when you buy a house.
In addition, there is no stamp duty in NZ if you sell a house, whereas in Singapore there is Seller’s Stamp Duty if you sell a residential property within 4 years of buying it.
So, the first benefit of investing in New Zealand is that it can cost significantly less money up front.
