Is it time for Australian investors to buy in New Zealand?

Australia's federal budget has made New Zealand more interesting to Australian property investors. Whether that interest translates into action is a different question, but the case for looking across the Tasman is more coherent right now than it has been in years.

What the Australian budget changed

From 1 July 2027, the existing 50 per cent capital gains discount for assets held longer than a year will be replaced by an inflation-indexed method with a minimum 30 per cent tax on gains. Negative gearing on established rental properties purchased after budget night has also been curtailed, meaning landlords will no longer be able to offset rental losses against other income, except on new builds.

The intent is clear: reduce investor competition for established homes and redirect capital into new supply. But investors facing materially worse after-tax returns on established Australian property are now looking elsewhere, and New Zealand is the most obvious alternative.

What New Zealand looks like from an Australian perspective

The gap between the two markets has never been wider. Australian house prices have roughly doubled since 2016, while New Zealand values grew strongly through the pandemic boom before correcting sharply. New Zealand's national median peaked at $925,000 NZD in November 2021 and has since fallen 16 to 18 per cent, settling within a narrow $750,000 to $800,000 band for the past three years.

The exchange rate compounds the advantage. One Australian dollar currently buys 1.22 New Zealand dollars, a decade high. For an Australian buyer, New Zealand property is materially cheaper in real terms than it was 18 months ago, independent of any movement in NZD prices. In Australian dollar terms, the national median translates to approximately $635,000 AUD at today's exchange rate.

New Zealand has no broad capital gains tax, only a two-year bright-line test on residential investment property. There is no stamp duty and no land tax. Interest deductibility on investment properties was fully restored in April 2025, improving the cash-flow position for landlords. Australia has moved decisively in the opposite direction on all three fronts.

Beyond price and tax, the regulatory pathway for Australians is straightforward in a way that applies to almost no other foreign buyer group. Under New Zealand's Overseas Investment Act, most non-residents require Overseas Investment Office consent to purchase residential property. Australian citizens and permanent residents are largely exempt. They can buy houses, apartments, investment properties, and most lifestyle blocks without approval, and are treated similarly to New Zealand citizens.

Where would Australians invest?

The national median tells only part of the story. Regional variation over the past decade has been significant, and where you buy in New Zealand matters as much as whether you buy.

The strongest growth has come from more affordable regions. Gisborne at 188 per cent, Southland at 157 per cent, and Manawatu-Wanganui at 132 per cent have all more than doubled over ten years. Otago at 107 per cent sits below those figures but at a higher price point of $700,000 NZD. Within Otago, Queenstown-Lakes District stands out. It has long been a concentration point for foreign buyers, driven by its internationally recognised lifestyle appeal and constrained supply that has supported values over the long run.

Auckland is the least compelling case. At $1,020,000 it is New Zealand's most expensive market and its weakest long-run performer at just 22.9 per cent over ten years. It is also the country's largest market, which means the national median tends to skew toward Auckland's price point, making New Zealand look more expensive than much of the country actually is.

The risks worth naming

Overseas buyers accounted for 2.6 per cent of home transfers in 2018, falling to 2.0 per cent in 2019 as the foreign buyer ban took effect, and have hovered around 0.4 per cent ever since. The most recent data runs to 2024, so it does not yet capture any shift following the Australian budget changes.

Migration data reinforces the caution. Net Australian arrivals to New Zealand briefly turned positive around 2020 before reversing sharply. New Zealand is now losing around 28,800 people net to Australia annually, back in line with the structural outflow that has characterised most of the past two decades.

New Zealand also has an election coming. Labour is heading into the 2026 vote with a proposal to introduce a capital gains tax on investment property sales. The tax settings Australian investors are currently eyeing may not be permanent, and any long-term decision should factor that in.