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February 2015

Property In New Zealand

Published: Saturday 28 February 2015

A quick glance at the New Zealand national property price trends over the past few years paints a picture of rapid growth, leading numerous property analysts to warn that the country is in the midst of an unsustainable property bubble. Since January 2012, the national average property price in New Zealand has risen from NZD402,412 to NZD494,083 just three years later. However, a closer examination of these figures reveals that these spiralling property prices are in fact confined to a few regions only, with Auckland easily the main driver of the national price growth. New Zealand’s most populous region – it is home to over 31 per cent of the country’s population – and by far and away the most popular destination for new immigrants, house values in Auckland have been consistently posting year-on-year double-digit percentage appreciation for the best part of two years. Indeed, house price figures released by Quotable Value New Zealand (a state-owned enterprise of the Kiwi government) at the beginning of February 2015, showed that average property prices in Auckland were 11.6 per cent higher than they were a year earlier, taking the average price of a home in the region to NZD775,555. Compare this to a region like Gisborne, located on the east coast of the North Island, and a very different picture emerges. There, property prices decreased by 4.5 per cent in the year to the end of January 2015, and average house values are just NZD225,047. Perhaps unsurprisingly, other regions popular with immigrants have also seen consistent, if not extortionate, price growth in recent years, not least Christchurch which has overtaken Wellington to become NZ’s second most popular immigrant destination due to the job opportunities that have arisen as the region is rebuilt following a series of earthquakes earlier this decade.

Buying Property in New Zealand

The good news for those who do wish to purchase a property in NZ once they move to the country is that the buying process is fairly straightforward. Once you have found a property you like you put in a written offer – usually through the agent who has shown you the property (verbal offers are not legally binding). This offer must be placed using a Sales and Purchase Agreement which will include factors such as mortgage finance, title searches and building reports which are designed to ensure you are covered should anything go wrong with the purchase. Once all the terms of the sale have been agreed to by both parties (seller and buyer) a contract can be signed. It is essential to note that this contract is legally binding. Neither party can pull out of the transaction once it has been signed, unless one or more of the conditions of the contract are not fulfilled. Nor can you be gazumped by a second buyer coming in with a bigger offer at a later date. Once the Sales & Purchase Agreement is signed and dated, you will be required to pay a deposit (usually 10 per cent of the agreed purchase price). Typically, the average New Zealand house sale transaction takes just six weeks to complete.   What’s more, eligibility criteria for mortgages are also quite good. You can generally borrow up to 70 per cent of the value of a property and the minimum loan is NZD100,000. Rates currently start at 5.1 per cent for a one-year fixed deal, to 6.25 per cent for a five-year fixed deal. It is also possible to purchase a property in New Zealand as a non-resident, should you wish to do so. If you would prefer to rent rather than buy a property in New Zealand, then again the process is relatively straightforward. Before a tenant moves in, the landlord and tenant need to complete a tenancy agreement, which sets out the key things the landlord and tenant agree to do. This will cover information such as when rent is paid, if pets are allowed, etcetera. Fixed-term residential rental contracts in New Zealand are often short-to-medium-term and long-term fixed contracts are relatively rare. As with buying, the amount you can expect to pay for a rental property will vary widely depending on the region in which you settle. According to New Zealand government figures, the national average rental for a three-bedroom home was NZD374 a week over the six months to 31st March 2014. In central parts of Auckland, though, this average cost increased to between NZD597 to NZD700 a week depending on the exact location of the property.

Property Sizes and Features

So what kind of property can you expect to live in, in New Zealand? Well, the most notable difference will be the construction of the house itself. The majority of properties in NZ are made using light timber framing, which forms the floors, walls and roofs for many NZ properties. That said, properties made from bricks and mortar, along with other materials, are also available, but the chances are you will find yourself looking at a few timber constructed properties during your house search. It's also worth noting that, if you're planning on moving to an area which is susceptible to earthquales - for example, Canterbury - then timber -framed properties are lightweigh and, with bracing, strong enough to withsand common magnitude earthquakes with relatively little damage. You can also expect your house in New Zealand to be larfer than the property you lived in back in the UK. According to QV figures, the average size of a house in New Zealand, based on floor area, is 149 m2. This varies between districts, cities and towns, and varies even more between suburbs. The Selwyn District, which streches from just went of Christchurch City right across to Arthur's Pass, has the country;s largest average house size of just over 180 m2 while Wairoa, located in Hawke's Bay, has the smallest average house size on any of New Zealand's two island at 112 m2. To give some context to this, the average size of a UK property is 98.6 m2. You can find out more about life in New Zealand, by expoloring the NZ section of our website.