Buying Property in New Zealand: A Guide for Foreigners

If you’re tempted to make New Zealand your home you’re not alone. Over 60,000 Australians live in New Zealand, with the largest cities of Auckland, Wellington and Christchurch proving popular places to settle.

Of course if you’re moving to New Zealand, buying a home is probably on your mind. This guide is a great place to start your research, covering some of the key things you need to know like how much a home will cost you, and how to save money on your down payment with Wise.

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What’s the property market like in New Zealand?

Property in New Zealand is relatively expensive considering the country’s small population and large land mass. This is thanks to years of sustained growth in housing prices, following consistent strong economic results and high demand for homes.

In fact, the price of houses went up an enormous 114% between 2001 and 2007¹, followed by a pause from 2008 as the world dealt with the financial crisis. Costs of homes then started to rise again in 2012 and have demonstrated a series of healthy increases since. This has resulted in the government implementing some measures to stop housing becoming too expensive for local buyers, including restrictions on some foreign purchases - more on that in a moment.

Can foreigners buy property in New Zealand?

There are restrictions on buying property in New Zealand as a foreigner. These were brought in relatively recently, to stop property prices being pushed up by investors who did not intend to settle in the country².

However, that doesn’t mean you can’t buy a place in New Zealand. Instead, there are rules and restrictions you’ll need to know about, which vary according to your citizenship, the type of property you want to buy, and how you intend to use it. For example, as an Australian citizen, you’ll be able to buy an apartment in New Zealand without any special permissions. You just need to confirm that there are no local restrictions in the specific area you’re looking in.

For people from some other countries, or with different purchase types, you may need to get special authorisations from the government, or you may find that the purchase is not allowed at all.

There’s a helpful tool on the New Zealand government website which allows you to enter basic details of your situation and the property you’d like to purchase, to check the most up to date rules³.

What’s the approximate cost of different properties in New Zealand?

When you’re researching properties to buy in New Zealand, you’ll need to think about what will suit your budget. A great place to start to build a picture of house prices in New Zealand is Numbeo.

Numbeo features dynamic information for all aspects of the costs of living in other countries, supplied by locals in those areas. As the detail is constantly updated, you’ll be able to get the most up to the minute prices in the locations of your choice.

Let’s take a look at the costs of property in the 3 largest cities in New Zealand.

Price per square metre	Auckland	Wellington	Christchurch
City centre apartment	NZD11,243	NZD7,283	NZD5,500
Apartment not in the city centre	NZD9,064	NZD4,714	NZD3,166

• Price information correct at time of research - 26 July 2020

How can I find a property in New Zealand?

New Zealand has a highly regulated property market. This means that you’ll find lots of helpful information online about how to find an agent, and the process of purchasing a property. Buying a place should only take 3 or 4 weeks from start to finish - significantly shorter than in many other countries.

Make sure you stick to official guidelines to navigate the process without hassle.

Property agencies and agents

Most property purchases in New Zealand are done through a property agent. It’s possible to make a private purchase but this is fairly unusual - and as a new arrival in New Zealand, you’ll likely find that having an agent on side makes the whole experience easier.

Real estate agents in New Zealand must be licensed. Check out the credentials of your agent - or find the right agent for you - by visiting the website of the Real Estate Authority of New Zealand⁴.

Avoiding scams

Buying a home in New Zealand should be straightforward, and there are plenty of protections in place to make sure consumers don’t run into trouble. For example, once an offer has been accepted, it’s not possible for another buyer to make a last minute bid and get the property you’d agreed to buy.

If you have any complaints about the real estate agent you’re using, or need advice or guidance, check out the Real Estate Authority of New Zealand’s website for support.

Property websites in New Zealand

Browsing property websites is a great way to get a feel for the types of home that may suit you. There are a good range of national property agents and umbrella sites which feature homes from all over the country - or you can choose a more local agent in your chosen location.

Here are a few of the larger property websites to start your search off:

• Harcourts
• Century 21
• Realestate.co.nz

How do I choose the right property?

Once you know where you want to move, you’ll need to find a specific property to suit your needs. Here are some factors to consider.

Property types

It helps to know the local phrasing when you’re considering buying a place overseas. Even with a shared language, there can be some differences in the wording when it comes to property descriptions.

In New Zealand you’ll find properties described as attached or standalone. As you might imagine, attached options include apartments and townhouses. Standalone options are more likely to be landed properties and single family homes. It’s helpful to know that land purchased for building on is known as a section in New Zealand. If you’re planning on building a place you’ll need to look carefully at the zoning of the land as some areas can not be developed easily, as well as any permissions needed to buy as a foreigner.

Condition of the property

Before you finally decide on a place to buy, you’ll want to check the condition of the property to ensure there are no major works required. You’ll be able to do this using a property inspection. Your real estate agent should recommend a few different property inspection companies to you, for you to select the one you want to use.

It’s also worth noting that the vendor may have commissioned their own report which they give to potential buyers as part of the viewing process. This is usually known as a building report. If you choose to rely on this report, and do not commission your own, you may not be able to complain against the property inspector later if the report turns out to be inaccurate. This is because the vendor, rather than you, commissioned the report in the first place. Getting your own report is advisable to be on the safe side.

There’s lots of helpful advice on the New Zealand Government’s Settled webpages covering this and other essential home buying topics⁵.

Other things to look out for

The New Zealand government also recommends a few other due diligence checks. Many of these can be done through your lawyer or conveyancer, including:

• Ask to see a title report and LIM (Land Information Memorandum)
• Get the council files on the property to check the plans match the actual building and there has been no unauthorised development on the site
• Check the zoning
• Ensure there are no council rates owed on the property
• Get an independent valuation to ensure you have a fair price for the home

What are the steps to buying a property as a foreigner?

The exact process for buying a home will depend on where you’re from, and the type of home you want to buy. There are restrictions on some types of purchase by foreigners, so you’ll need to ensure you are eligible to buy the property you’ve selected.

Here are the basic steps you need to follow:

• Work out your budget, including your deposit and any likely mortgage funds you’ll access
• Find a lawyer or conveyancer, and a property inspector, so you have a team on hand when you find the right place to buy
• Research property options online and through your chosen real estate agent
• Once you have identified a home, carry out due diligence checks to make sure there are no issues, including getting a property inspection and LIM
• Make an offer and get the sale and purchase agreement for the property - this is legally binding and must be checked by your lawyer. You may need to pay a deposit at this stage
• Carry out pre-settlement requirements, including a final inspection
• Settle on the property - this will mean paying the balance owed and transferring the legal ownership

Check out this, and much more helpful advice on the New Zealand Government’s Settled webpages⁵.

What are the legal requirements to buying a property in New Zealand?

When you buy a property in New Zealand, you’ll need to get a lawyer or conveyancer on side early to help you navigate the legal paperwork and requirements.

How do I get a bank loan/mortgage?

There are plenty of banks to choose from in New Zealand, including big national brands, those with a regional presence, and global institutions. All of the major banks offer mortgage products, and you’ll also find some have a specific migrant banking team to help people newly arrived in the country.

Not all mortgage products will be available to you as a foreign buyer. If you have any trouble finding the right product you might choose to use a mortgage broker who can help connect you with specialist services.

Choosing a bank

One issue you may have when applying for a mortgage is that many banks require local credit history to assess your suitability for a mortgage with them. If you’re new to the country, you may not have easy access to the paperwork needed to prove you’re a good credit risk.

If you bank in Australia with an institution which has a presence in New Zealand, you might find it easier to get a mortgage through your existing bank, as they’ll already have details of your credit history. Talk to your home bank in Australia before you head to New Zealand if possible, to check out their policies for extending loans to people moving overseas.

Deposits / Down payments

During the house purchase process you’ll almost certainly need to pay a deposit to make sure the sale can go ahead. For several years there were mandatory limits to the amount banks could lend customers in relation to the cost of the property. These loan to value limits in effect meant that buyers had to have at least a 20% down payment on the property to secure a mortgage.

In 2020, these rules have been loosened, although individual banks will still choose the level of lending they are able to offer individual customers. As a foreign buyer - or if you’re buying a property as an investment rather than a permanent home - you may well find you need a substantial deposit to get a loan.

Whether you need to send over a large amount of money to New Zealand for a mortgage down payment, or you just need to cover some of the fees involved in buying a home overseas, you’ll probably find you need to make an international payment or two. Sending money abroad can prove very expensive, especially once you take into account the costs of both fees and exchange rate markups.

A smart way to cut the costs of sending money overseas is to use a specialist provider like Wise. All payments are made using the mid-market exchange rate with no markup, and the fees are low and transparent.

What kind of taxes and fees will I need to pay?

Buying a home is never cheap - and when you’re buying overseas it’s especially important to understand the costs in advance. Here are some of the key fees to know about⁷:

• Agency/Agent fees - 3.5% - 4% of the transaction cst, + 15% GST. Usually paid by the seller
• Lawyer or conveyancer fees - depend on the specific services you commission. Conveyancing alone typically costs NZD1,500
• Public Registration fees - NZD80

Don’t forget, when you’re paying any of these fees from overseas, you may also pay a markup on the exchange rate as well as international transaction fees. You can cut the costs, and avoid exchange rate markups entirely, by using a currency service which uses the mid-market exchange rate like Wise.

Relocating to New Zealand is an attractive option, and Australians do have the opportunity to buy certain types of property there despite restrictions on some foreign purchases of real estate. If you are looking for a way to send money to New Zealand, Wise could be an option.

The property market in New Zealand is well regulated and the process is fairly quick and simple to follow - but that doesn’t mean it’ll work just like buying a place at home. Do your research before you get started to make sure there are no nasty surprises. And don’t forget to look out for Wise as a low cost way to send money overseas, so you can save on fees, and have more to spend on yourself.

Sources:

1. Global Property Guide - New Zealand
2. Global Property Guide - New Zealand - Buying Guide
3. Buying a House in NZ
4. Real Estate Authority NZ
5. Getting Settled in NZ
6. Loan to Valuation Guide
7. Global Property Guide - New Zealand - Buying Guide

All sources accurate as of 26 July 2020