Own a home in NZ? What to do???

I'm seeing a lot of Kiwis jumping the ditch to a better life in Australia. Many have homes in NZ, and face the decision of whether to sell, or rent it out.

Everyone is different, with varying requirements and circumstances. So, there is not a straight forward answer to this question. However, there are factors that should be taken into account:

1. Do you need $$ for a home deposit in Australia? Relying on a Kiwisaver withdrawal and / or a possible first home owners grant will not get you over the line. You need at the very least 5% genuine savings, preferably 10% as a bare minimum. Having a chunk of equity tied up in NZ property can be a major hindrance to buying a home here. Consider ways to access that equity before you leave NZ (eg. top up your home loan, set up your loan with a redraw etc).

2. Do you want to be a landlord? There are several considerations here ... is your home a suitable rental property? Do you need to top up the loan repayments? Can you find a good property manager? It can be difficult managing a property from across the ditch, so you've got to employ a good PM that does the job properly - rigorous tenant selection and regular property inspections are paramount.

3. Tax considerations. Converting your own home to a rental can throw up tax issues, particularly around bright line and income tax. Ensure you have all this covered off with a property tax accountant before you leave NZ. You don't want nasty surprises down the track.

If the thought of leaving your NZ home in the hands of tenants, and all the other associated issues, makes you nervous, then you could consider selling. Trouble is, there are a lot a Kiwis confronted with this choice - the market is not in the best of shape. Here's some stats:

• Median NZ house price May 2024 $790,000. May 2021 it was $820,000. The median price peaked in Nov 2021 at $925,000.

• Inventory of homes for sale in May 2024 is 24 weeks. May 2021 it was just 8 weeks. This measures how long it would take to clear all the homes currently for sale.

• Days to sell May 2024 = 43. In May 2021 it was 29 days.

• Median price growth (YoY) at May 2024 was1.28%. In May 2021 it was 24%.

So, you can see that the current market is a bit dicey. There is not a lot of light at the end of the tunnel.

My advice is to analyse the likelihood of an Australian property outperforming your NZ home in the medium to long term. Currently Australia is leading the charge. Chances are selling NZ and buying Australia will provide a better return, especially when you weigh up the benefit of owning vs renting here.

I'm not telling you what to do. It's a very personal choice. However, if I was moving to Oz for the long term, I'd be cutting my losses in NZ and putting your home equity to better work here in Oz.