Buying a home in New Zealand

The level of home ownership in New Zealand is amongst the highest in the world, so it’s very normal for people to buy a house here. As a new arrival, you might want to buy immediately, to help you and your family feel more settled. Although that’s understandable, don’t let the urge to settle or any sales pressure push you into a decision too quickly. And do consider renting as an option – see our renting info here.

Once you’re ready to buy, you’ll probably find buying a property – even a large, lifestyle property in the country – is surprisingly affordable. And the buying process is well organised and regulated to ensure a fair process for both buyers and sellers. It can take as little as three to four weeks to complete the purchase once you’ve found the place you want.

House prices differ by region, and from inner city to suburb, and a large property with perhaps sea views, a swimming pool and a large garden will be upwards of NZ$1 million. But in the middle range, for a three bedroom home in good order, the prices are considerably less, as this table shows:

*These prices are from August 2009 on www.qv.co.nz

Finding a property

Properties are usually sold through a real estate agent, although some properties are sold in private sales, with the vendor and buyer negotiating directly. Note that real estate agents in New Zealand represent the seller, not the buyer, placing the onus on the buyer to arrange structural surveys and other checks, and to be satisfied that the price is right. The real estate agent earns a commission from the vendor once the property is sold.

You’ll find listings of properties for sale in local newspapers and property websites (see the links below). Real estate agents will also display current listings at their offices, so it’s worth a visit to the shopping area of your preferred location where you’ll find most real estate agent offices. Agents are usually happy to drive you around on a tour of properties they have listed.

Another way to view houses is at an ‘open home’ where the property is open for public view at set times. Outside those times, you can arrange a private viewing with the agent. To see current listings of properties for sale, check the links below.

Assessing a property

You’ll have your own checklist of what the property needs to have to fit your needs – or dreams. It’s also advisable to have independent assessments. The first check is a LIM report (Land Information Memorandum) available from the local council which provides official details about the property and its location.

The local council also provides a ‘rating valuation’ which is what the council considers the land and building is worth. This valuation is used to set ‘rates’ which property owners pay to cover water supply, road maintenance, rubbish collection and public services such as libraries, parks and swimming pools. The rating valuation (also known as the GV) is often used as a guide for setting the sale price. However, although not as common, houses can sell for more or less than the valuation, depending on market demand, interest rates and when the valuation was done.

It’s also a good idea to get an independent valuation of the property and perhaps a professional property inspection. These will confirm that you’re paying the right price, and can identify any issues with the property that you may not have noticed.

Most home buyers work with a lawyer throughout the process. A lawyer is needed to process the ownership documents when the sale is completed, but can also assist with checking all the paperwork such as the LIM report and searching the ‘title’ for the property to make sure there are no ownership or legal problems with the property.

Buying a property

There are several ways property is sold in New Zealand. Any real estate agent will be able to explain the process and your rights and obligations in full detail, but here are the primary methods:

• You can make an offer
  Some vendors state a price, or a price range, and you can make an offer on that price. Unless there is high demand for properties in the marketplace, it’s quite usual to start by offering a price less than the asking price.The agent will present the offer for you, and conduct any further negotiations until both parties reach agreement.
  
  If you’re absolutely certain about the property, and have finance ready, you can make an ‘unconditional’ offer, which is binding on both parties once it has been accepted.
  
  Or you can make a ‘conditional offer’ which allows for conditions such as arranging finance to buy the property. The property doesn’t change hands until the conditions have been met, by an agreed date. Provided you meet the conditions by the agreed date, no one else can buy the property. 
   
• You can buy at auction
  Many properties are sold at auction. If you’re the successful bidder, you will need to immediately pay the deposit (usually 10% of the selling price). You’ll also need to have finance arranged and be ready to pay on the settlement date, which is usually a few weeks after the auction.
   
• You can tender for a property
  Properties can also be sold by tender, where everyone interested in the property submits a written offer, usually at the same time. Each potential buyer is unaware of the others’ offers. The vendor selects the most attractive offer, which may be based on the best price or the offer with the fewest conditions.

Financing a property

If you’ve sold your current property before coming to New Zealand, you may have cash in hand for your new property. Or you may need to arrange mortgage finance. Banks and financial organisations – including mortgage brokers – offer a wide range of options, although the maximum amount you can borrow against a property is usually 95%. The processing of finance is efficient, and a mortgage can be arranged in as little as 24 hours.

Costs associated with buying a property include legal fees and the costs of securing a LIM report and valuation, and these are generally reasonable.

Real estate agent fees are included in all sale agreements and are paid by the vendor, so will be included in the sale price of the property.

Insurance is usually required by a bank in order to complete the mortgage, and costs vary depending on the value of the house.

Next steps

Now that you’ve got an overview of how the property market works in New Zealand, you can start the fun bit. Looking for your dream place to live. Start looking  now with these links:

For government information about building and housing see www.dbh.govt.nz
For a guide to property valuations and reports see www.qv.co.nz.
Properties and apartments to let are advertised in local newspapers and property websites such as:

• www.realestate.co.nz

• www.trademe.co.nz/property

• www.sella.co.nz/property

• www.nz.open2view.com

• www.harcourts.co.nz

• www.raywhite.co.nz

• www.professionals.co.nz

• www.bayleys.co.nz

• www.barfoot.co.nz

• www.premium.co.nz

For a list of registered banks in New Zealand where you can arrange finance for buying a house see www.rbnz.govt.nz/nzbanks.  To find out more about finances in New Zealand, click here.