“Thoughts from someone leaving NZ”

Continuing in our series of Migrant Tales – first hand accounts of the migrant experience of New Zealand taken from places around the net.

A reader sent us a link to this story, which appeared on an internet blog in early 2011.

Thoughts from someone leaving NZ

Since my girlfriend and I are leaving New Zealand for good probably, I decided I’d write about the New Zealand economy from my opinion as a 30 year old. Take this with a grain of salt, as it is purely anecdotal, I don’t have time to lookup citations for my observations.

Me

I’ve started two business in New Zealand. One, *****, generated about 100k€ of export revenue in the first year, employed 5 staff and is growing faster than ever. My co-founder has just left New Zealand with the rest of the company so they can be closer to their export markets in Europe. My other business,******, employed a half dozen people and was part of the Wellington startup cluster that jumpstarted in 2006. ***** and I are now off travelling around New Zealand in a van, then moving to Brisbane for a few months before travelling to either the US or Europe.

It’s expensive here

Food and entertainment are expensive. It’s cheaper to shop at a Tengelmann supermarket in Munich using New Zealand dollars, than it is to shop at a New Zealand supermarket in New Zealand dollars. New Zealand cheese is cheaper in Australian supermarkets than in New Zealand supermarkets. It’s interesting talking to European backpackers who are astounded at how expensive it is to travel around in New Zealand. $42 / night for a campground? $8 for sausages? $5 for a loaf of bread? $18 for a six-pack of beer?

Housing is expensive here

As an investment, I feel uncomfortable taking on an extra two years worth of salary as debt, when you don’t need to take that much debt to buy a house in another country. It seems especially perverse because there is so much good available land that is undeveloped. We’re not Japan or Germany.

The economy is overinvested in property and finance

The UK learnt that relying purely on investment in property and the financial markets wasn’t a good idea over the past decade. They look at producing countries (like Germany, Japan and China) and realise that there is actual value in inventing technology, processes and processing businesses. New Zealand really only invests in the primary market and property. There are some well known exporters like Xero, but they’re about 0.01% of our industry. And New Zealand doesn’t seem to have realized yet that they need to become a strong economy in secondary industries (like processing, manufacturing, designing).

New Zealand should have a distance discount

Being so far from our customers, investors and partners, people should have a discount to work in New Zealand. Instead it’s more expensive to live in Wellington than to live in Munich.

It’s lovely here

I used to hate on New Zealand a bit much and I’m sorry for that. It’s really a beautiful country. The people are nice, the coffee is awesome. When things are slow, affordable and easy this is a wonderful country. The diving, beaches and mountain biking are off the hook.

We’ll be back

I hope that we’ll be back in New Zealand to live, or at least for our holidays. My prediction is that the property market will stagnate for half a decade, while salaries slowly creep up to bring affordability back. This relies on the government taking steps to squash investment property (since investment property tax advantages make an investment property a more affordable purchase than a first home).

Affordability is good for everyone

Part of the problem with the gap increasing between rich and poor, with people having to spend 120% of their salary to pay a mortgage, is that people are stressed out. I don’t want to live on a street full of renters who live in cold, substandard housing. I don’t want to live in a street of people who are working all hours and stressed out to meet their repayments.

The labour government was atrocious

I’m a Greens supporter, so in theory I should support Labour more than National, but Labour did absolutely nothing to protect New Zealands quality of life from the stupidity of the consumer debt bubble. It was John Key who did the first (half assed and limp wristed) attempts to redirect investment from the property sector into industry.

In a perfect (unlikely) world, property investment would be limited purely to apartment complexes and fresh developments in subdivisions, and tax-breaks would be geared to encourage owner-occupiers in existing properties.

Let’s see what happens.

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2 thoughts on ““Thoughts from someone leaving NZ”

  1. http://www.radionz.co.nz/news/business/233721/nz-homes-cost-twice-what-they-should Mostly everyone I know is agreeing that the NZ government has NOT stopped a housing bubble, just slowed it down. Housing is still at minimum 20% more than historical values, which have always been high anyway, as everything is on a remote island. The “double cost” applies to houses in cities like Auckland, but I have seen some houses in godforsaken areas where the owners want twice what their houses are worth considering no jobs in the area, and less all the time. There have been double-digit falls in the numbers of properties sold – everyone wants to get what they paid for their homes, and no one wants to pay that. So they are still mostly hanging onto these overpriced properties. http://www.scoop.co.nz/stories/PA1401/S00113/prime-minister-has-a-rose-tinted-view-of-the-economy.htm It is also a confidence game – they need foreign investment and if they admit how bad things actually are, the flow of foreign money will stop. So they just lie – to everyone. Clearly the bubble has not stopped, housing is still unaffordable, and given that all Kiwis put their money into real estate, they’re probably eventually, and maybe even in the near future, going to feel something more than the excruciating everyday grind of the Kiwi low-cash crunch.

  2. It is a chicken egg problem. Kiwis are deeply in debt, and they do not want to rock the boat too hard, because they don’t have far to fall, and heavy loads on their backs. There are few jobs that pay well, and the homes cost crazy $$$$$$$$$$$$$$ all out of proportion to their quality. There has been an adjustment, but the bubble has not burst yet. Property is not just property to Kiwis. It is everything, because they have nothing in the bank. The land and home is their bank, and they cannot take a big hit to it. Cost of living is at least a third higher than in someplace like the U.S.

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