Property investors are looking beyond traditional Australian markets
Australian property investors squeezed by new federal budget policies are increasingly looking at New Zealand real estate, drawn by lower house prices, no capital gains tax and no stamp duty, according to a report by property platform OneRoof.
Federal Treasurer Jim Chalmers presented Australia’s 2026–27 Budget on 12 May, introducing the partial removal of negative gearing for existing residential properties purchased after budget night and an inflation-adjusted capital gains tax. Under the changes, losses from established residential properties will only be deductible against rental income or capital gains from residential properties from 1 July 2027, according to National Australia Bank’s budget analysis.
The policy shift has coincided with a sharp cooling in the Australian housing market. National auction clearance rates fell to around 50.4% in late May – the lowest reading since the early weeks of the COVID-19 pandemic in 2020, according to property data firm Cotality. The national capital-city median house price fell 0.8% over the May quarter to $1,287,476, with Sydney and Melbourne recording home sales 17.0% and 14.2% lower year-on-year, respectively, Cotality data showed.
Cross-Tasman tax gap widens
Ray White economist Atom Go Tian told OneRoof that Australians are subject to the same property-buying rules in New Zealand as local residents, while New Zealanders purchasing property in Australia are treated as foreign buyers unless they reside there. He noted that New Zealand’s average house price sits at around $800,000, compared with approximately $1 million in Australia.
“Anecdotally, there’s a lot of evidence encouraging Australian investors to consider New Zealand,” Tian said.
Opes Partners economist Ed McKnight said the tax contrast between the two markets is significant. McKnight noted Australians face stamp duty, capital gains tax and potential land taxes when buying in Australia – costs largely absent in New Zealand.
“If you are based in New Zealand, not only do you pay the standard stamp duty, but you pay the higher one because you are an investor, and you pay a higher one again because you’re domiciled overseas, so the stamp duties really start to add up,” McKnight said.
Mike Rudd, Auckland head of taxation services for Baker Tilly Staples Rodway, said the gap between the two tax regimes is considerable.
“The contrast is startling between an Australian buying a rental property here versus a New Zealander buying a rental property in Australia,” he said. “Generally, Australians are amazed by our lack of capital gains tax. They really loved that part.”
Rudd cautioned that New Zealand residents purchasing property in Australia face significantly higher tax burdens than local buyers.
“The cost and the penalties for being a New Zealander buying those [Australian] properties are significantly greater,” he said.
Stress-testing Australian investors
Twine Advisers director and mortgage adviser Eugene Bartsaikin noted most New Zealand banks are willing to lend to Australian borrowers, although stress testing applies.
“It’s fairly routine. The main thing here is that although the banks in New Zealand are fairly amenable to working with Australians and quite pragmatic, they still stress-test [applicants]. So, households with a lot of borrowing or property investors with a lot of properties might be stress-tested more than they would be if they were buying a property in Australia,” Bartsaikin said.
He also noted that New Zealand rental properties tend to offer higher yields than their Australian counterparts.
“It’s very difficult to find anything even remotely cash-flow neutral in Australia,” Bartsaikin said.
Mortgages Plus director Chris Dodson, a New Zealander based in Australia, said the budget changes are likely to alter investor behaviour, although Australia’s domestic market retains some advantages.
“It’s a lot easier to invest in Melbourne than it is in New Zealand,” Dodson said.
He noted cities such as Queenstown and Wānaka are appealing to investors but would typically suit experienced buyers.
“I think you would only want to do that after your third or your fourth [investment] property,” he said.
Australian buyers have historically concentrated their activity in Auckland and Queenstown, with Queenstown attracting interest as a holiday-home destination. Tian said he would monitor purchase data to determine whether Australian buyers begin spreading into other New Zealand regions.
