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. However, closer analysis of this data reveals that on the whole the price rises are confined largely to the country’s most populous city, Auckland, with Christchurch also seeing fairly strong growth. Elsewhere in the country, property price growth has either remained fairly flat or increased at a sustainable level, meaning bargains are still to be had.
Indeed, house price figures released by Quotable Value New Zealand (a state-owned enterprise of the Kiwi government) at the beginning of May 2016, showed that average property prices in Auckland were 16.5 per cent higher than they were a year earlier, taking the average price of a home in the region to NZ$942,760. 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 increased by just 3.3 per cent in the year to the end of May 2016, and average house values are just NZ$235,440.
Perhaps unsurprisingly, other regions popular with immigrants have also seen consistent price growth in recent years, not least the regions close to Auckland, where immigrants are increasingly heading as they are priced out of the country’s largest city.
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 NZ$100,000. Rates currently start at 5.10 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 NZ$460 a week in December 2015. In central parts of Auckland, though, this average cost increased to between NZ$550 to NZ$750 a week depending on the exact location and size of the property.
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 earthquakes – for example, Canterbury – then timber-framed properties are lightweight and, with bracing, strong enough to withstand common magnitude earthquakes with relatively little damage.
You can also expect your home in New Zealand to be larger 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 stretches from just west 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 islands at 112 m2. To give some context to this, the average size of a UK property is 98.6 m2.