Buying in New Zealand
A balanced lifestyle, great job opportunities, excellent public-service systems and a welcoming attitude to immigrants makes the Kiwi Kingdom appealing.
‘It is a land uplifted high,’ wrote Dutch navigator Abel Tasman when, as the first European, he laid eyes on New Zealand in 1642. Indeed, this fertile and mountainous group of islands in the southwestern Pacific Ocean is defined by snowy peaks, fjord-scarred shores and pastures dotted with sheep. It’s also a country in which South Africans feel right at home, given that it, too, is peopled in part by descendants of British settlers (rugby clubs with names such as Canterbury and Wellington attest to this). And, as further incentive to those considering a move to the land of the haka and The Hobbit, New Zealand’s economic growth has remained positive despite the slow pace of the global economy, and its residential real-estate market is undeniably on the up.
Government property valuer Quotable Value (QV) reported house prices spiking to record highs in August 2013, as demand outpaced supply in New Zealand’s largest cities. The residential property index rose 8,5% in the year to end August 2013, 8,3% higher than the market’s previous peak in late 2007 and up from an 8,1% annual rate in July. Meanwhile, average home prices in New Zealand have risen to NZ$390 000 (approximately R3,3 million), data from the Real Estate Institute of New Zealand reveals. ‘And house prices are predicted to keep rising, although at a slower pace,’ says Felix Delbruck, a senior economist at the country’s second-largest bank, Westpac.
According to Delbruck, the reason for the hike (despite the Reserve Bank having introduced, in October 2013, limits on low-deposit home loans and increasing fixed-term mortgage rates) is New Zealand’s high rate of immigration. Delbruck reports that, by end September 2013, New Zealand had had a net gain of 15 200 migrants, compared with a net loss of 3 300 in the previous year.
Unsurprisingly, house prices vary markedly depending on where in the country you’re planning to buy. Auckland has the most expensive housing at an average price of NZ$550 000 (around R4,7 million), followed by Central Otago Lakes at an average price of NZ$478 000 (R4,1 million) and Wellington at an average price of NZ$390 000 (R3,3 million). Southland has the cheapest housing, at an average price of NZ$186 000 (R1,6 million).
When compared to other countries, property purchasing in New Zealand is a straightforward process. The mortgage market is highly competitive and banks offer a wide range of mortgage options, which can be tailored to individual requirements and are usually capped at 95% of the sale price. The mortgaging process is also incredibly efficient (mortgage finance can be arranged in 24 hours!) While the purchase of property does not give the buyer the right to live permanently in the country, it is not necessary to be a resident to buy.
That said, New Zealand’s immigration policies have been designed to support economic growth so the country welcomes those who can offer skills, experience or capital that are in short supply locally (not hard considering the fact that the country is attempting to recover from years of so-called brain drain). After five years on a resident visa, it is possible to apply for New Zealand citizenship.
The most common ways to buy are at auction or by tender; as a result, prices do not always feature on property listings. Essential before signing on the dotted line is to get a property inspection report – Land Information Memorandum (LIM) – as well as to conduct a title search to ensure you know the facts about the home’s history.
Most homes in New Zealand are sold at auction and it is crucial to familiarise yourself with the auction process. Auction contracts are unconditional so you need to have organised finance, had the contract looked over by your lawyer and completed any inspections before the auction date. Use an e-valuer report from Quotable Value (see below) to give you an idea of the property’s value – the reserve price is the lowest price the seller is willing to accept for the property and is confidential to the seller. To participate in an auction, it is essential to have preregistered. It is possible, however, to ask the vendor if he will consider a pre-auction offer.
This process involves the submission by prospective buyers of a confidential written offer to the agent for the seller’s consideration. There is no reserve price but there may be a price guide, although you may offer less. Prospective buyers must fill in a legally binding sale-and-purchase agreement, which includes the offer, a deposit cheque (5% to 10% of the offer price), settlement dates and any conditions attached to the offer. Prospective buyers can also register interest with an agent on a particular property and ask to be informed if another prospective buyer makes an offer before the tender deadline. The seller will weigh up the offers. If a tender is accepted, the buyer is in contract with the seller. If a seller does not accept a tender, the seller can negotiate with the unsuccessful tenderer to reach an agreement.
- New Zealand High Commission and Immigration in South Africa:
125 Middel Street, Nieuw Muckleneuk, Pretoria, 012 435 9000.
Find out more at http://www.immigration.govt.nz/branch/PretoriaBranchHome/
- The Real Estate Agents Authority (REAA) is an independent government agency regulating real-estate agents and helping to protect buyers and sellers. The REAA provides comprehensive information about buying and selling for both parties.
Find out more at reaa.govt.nz/Pages/default.aspx
- New Zealand Now is a website operated by Immigration New Zealand (INZ) that is dedicated to providing relevant and useful information for those who wish to live, work, study or invest in the country.
Find out more at newzealandnow.govt.nz
- Angloinfo, the renowned global expat network, is dedicated to covering ‘everything you need to know about moving to New Zealand’ on its informative website.
Find out more at http://newzealand.angloinfo.com
- Visit the Immigration Advisers Authority website to source a licensed immigration professional who can make the process of relocating to New Zealand far smoother.
Find out more at iaa.govt.nz/adviser-register
- Government property valuer Quotable Value (QV) provides information and valuation services to aid the decision-making process.
Find out more at QV.co.nz
- Text: Jocelyn Warrington and Juliet King.