How To Buy Property In New Zealand: A Practical Guide

Date Dec 2, 2020
Blog category Power
By Tina M.
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These days, a lot of people are dreaming about moving to New Zealand. There’s no denying that NZ is a top travel destination, but the pandemic has made it even more popular. People and celebrities have been lauding the country's effective COVID-19 response, and the relatively "free" life even in the midst of all these craziness. And so the question prevails: how can one buy a house in New Zealand?

Well, for starters, only citizens and residents are able to purchase a property in New Zealand.

The exception to this are Australian and Singaporean citizens, who are also free to purchase properties in New Zealand as granted by free-trade agreements with both countries. All other hopefuls are required to satisfy a criteria to be approved.

If you think you qualify and are actively looking for a new home or an investment, checkout this guide before settling on a property.

Below the guide, we added our very insightful interview with NZ resident Denis, who has recently purchased a home in South Auckland.

Check costs

New Zealand has a large landmass with only a small population, which makes properties a little more expensive. Checking with online sites about pricing can help you decide on which property to buy. Once you've decided, you can look for a registered valuer for an independent valuation of the property you want. Today's median property price increased by 15.4% from $520,000 in October 2019, and an all-time high in Auckland properties that went from $860,000 to $1,000,000.

However, houses in rural areas are as beautiful and worth investing in. You can check out places outside the city and can still expect a good return of investment later on.

  1. Whanganui, North Island
  2. Greymouth, West Coast, South Island
  3. Gisborne, North Island
  4. Invercargill, South Island
  5. Taranaki, North Island

Source: Where will I find the cheapest homes in New Zealand?

Check related property rates

Property buying doesn't just end when you close the deal. You have to include rates and other expenses in your budget. These rates are charged by local councils for the services they provide for the community which includes roads, water pipes, sewerage, parks, libraries, recreation services, local policies and regulations, community and economic development, and town planning. Rates differ depending on the location and value of the property. Saving on electricity and other utilities may help you save for monthly rates. Different power companies are offering affordable power plans for homeowners like you. Find a power plan that suits your budget right here at CompareBear

Get more details about a property's community when you visit a local council’s official page. 

Check the requirements for overseas investors

The amended law for overseas investments was promulgated this year, ensuring that Kiwis are being equally benefited and their interest protected in every investment. The national government deems it fit that foreigners who are interested in buying properties in the country should comply with certain requirements. 

Large apartment developments can be one of your options if you want to get a property right away. Developers obtaining a transitional exemption certificate are allowed to directly sell these apartments to overseas investors, where they can live in and do not require to on-sell.  If, however, the apartment you like doesn't have a certification, you may undergo a longer process to apply for a property. 

Overseas persons require consent from the Overseas Investment Office (OIO) to proceed with their investments, whether they be property or business assets. You will be assessed mainly for your intent, finances, and capability in managing a property. 

To find out more, you can read the qualifications here

Apply for a bank loan

To secure an investment, you need to show that you’re credible and are capable of paying off a desired property. 

NZ-based banks offer home loans that you can apply for through their migrant banking service equipped with multilingual staff. You can hire a mortgage broker to act as a middle man in order to settle your loan with the bank. It might also be smart to enlist the services of an expert to assist you with applications and find you better loan options not available to the public. 

Look for Home Insurance 

New Zealand is prone to natural disasters like earthquakes and flooding that’s why home insurance plans offer competitive features for residents and non-residents at an affordable price. Of course, part of investing in a property is taking good care of it, more so when you have a house overseas. Applying for home insurance is a practical measure to prevent further damage and deterioration of your property. Major banks in the country offer several options that can be suitable for foreign investors like you. They can give an online valuation of your premium through an online calculator available on their website. 

Know more about how you can invest in an NZ property by hiring a team of experts — a lawyer and a property inspector — to guide you through the process.

Denis' NZ home-buying journey involves getting a lawyer, so read on to learn more.

Denis is a 29-year old business owner and NZ resident who just got his South Auckland home last November. Here's how he was able to buy a property in New Zealand.

What’s your house’s price range?

My initial budget was under $650,000, the aim was always to get it as cheap as possible so I have less mortgage to pay and maximum benefit if the house prices go up. However with the house market going a bit crazy as a result of COVID and recent banking changes, the house prices started to increase rapidly. This meant my house budget had to increase with it to $700,000. 

How long did it take you to save up or plan to buy a property?

Buying a house was never a goal, but it was always in the back of my mind. Instead, I just focused on saving money so I can use it for either buying a house, investing into shares, or any other business. 

To be honest, I had almost $0 to my name, about 5 years ago in 2015, when I quit my job at one of the big accounting firms. In fact, it was a negative balance if I count my Student Loan. Around that time we started a business and over the years we managed to pay ourselves salary. 

As a result of that, I focused heavily on saving and living frugally to save up enough money that I can then use to put as a deposit for a house.

What were the steps you took to buy a house?

The first step was to get a pre-approval for my loan, which gives me an idea in what range I can afford a house. Once I had an idea of my range, I began searching for houses on TradeMe. 

Then it was the process of going to those homes, checking them out, and putting offers. I missed out on a few homes, but eventually my offer got accepted.

From there I had to engage my lawyers to review the agreement, my KiwiSaver, and my bank. Essentially, most of the work was with the lawyers. All I had to do was communicate with them and sign some documents, which is a pretty easy process.

Although [I'd advice], limit exposure to your lawyers so the fee doesn’t run up too high. Alternatively, if you can negotiate a fixed amount, then even better!

What are some things that aspiring homeowners should know early on about with the whole home-buying process?

What I found is there is actually a lot of house flipping going on. Meaning people buy and sell the house within few days. This is especially apparent in a hot market and I was affected by that transaction. 

I understand why it is happening and I’m not in the position to judge those people because who is to say that I wouldn’t do the same? Bu it was an interesting experience for me. 

Prepare to wait, as your lawyers, KiwiSaver providers, and banks will take time to process your documents. And if you can negotiate a fixed fee with your lawyers, then even better.

Any advice for those who want to own a home, but don’t know where or how to start?

Yeah, review your KiwiSaver providers. There are a lot of great ones out there that provide great returns at lower fees. This is what you want when saving for your deposit, get as much money as possible while paying the lowest fees. If you are looking to buy a home and it's a few years away, then that will be super important for your overall first home withdrawal balance. 

If this information has helped you or piqued your interest in buying a property in New Zealand, you may connect with Denis over on TikTok @dentyurkov where he shares helpful information and clips of his life in NZ.

About the author
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Tina M.

Tina M. is a content writer and an aspiring law practitioner. She mainly writes about real estate, finance, and investing. Ever the creative, she loves painting, home renovating, and getting meme ideas from reality TV.

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