Buying a House
Buying your own home is a big decision. It’s a commitment you may want to delay until you’re feeling settled in.
A beginner’s guide to buying
There are many different types of housing in New Zealand, ranging from rural ‘lifestyle blocks’ to villas to modern suburban homes and apartments. There’s a good breakdown of the different types of New Zealand housing in the Living Guide.
Prices for homes in New Zealand are equally varied. A lot depends on where they are located – homes in Auckland, for example, are generally more expensive than homes in Hamilton. House prices in smaller cities and towns tend to be less expensive. Costs also vary within neighbourhoods and it is important to find out as much as possible about an area before you buy.
Take time to look around and become familiar with the market. Buying a home is an important decision and should not be taken lightly. For most Kiwis their family home is their largest purchase and their largest single investment - the benefits of buying well, and the potential dangers of a poor choice, can be substantial.
Because of the level of potential risk most home buyers will engage the services of a professional agent, however this is not a legal requirement.
Once you feel you really understand the local market and are sure you have found what you want, buying a home can be completed within three or four weeks.
Where to look
Free publications are available from real estate companies and are often added to local newspapers. Special property features are run in the Wednesday and Saturday editions of most major newspapers.
The Real Estate Institute provides national listings at www.realestate.co.nz. Most real estate agents also have their own websites, and many also list houses on TradeMe property
Real estate agents
Most houses are sold through real estate agents who operate on a commission that is paid to them by the seller. Agents will make appointments for you to see properties – they will usually also provide transport if you ask them. You may use any number of agents to search for a property, but when you decide to buy you will deal only with the agent managing the sale. For your security, agents should be members of the MREINZ.
Open homes
People who are selling their houses often hold ‘open homes’ at the weekend. This is an opportunity to visit the house and look around. ‘Open homes’ are usually open for up to one hour. Anyone can come and view the house during this time. Open homes are usually advertised in the same places as the houses themselves.
Borrowing money
The mortgage market in New Zealand is highly competitive and it is well worth shopping around for the best deal. A good place to start is: www.realestate.co.nz which provides an up-to-date survey of mortgage interest rates and access to a handy Mortgage Calculator.
Banks can choose the terms of the loan they offer based on the risk they believe is involved. It is very rare for loans to be made for more than 95% of a property’s sale price. The 2008 global financial situation attributed to the United States’ property market has made most lenders more conservative.
Rates
All property owners are required to pay rates to their local area authorities, to help fund the civic activities of the area, and the amount of rates for each household is based on property value.
Property valuation
Who decides what the property is worth? The local council’s own ‘rating valuation’ or RV is calculated regularly - usually every 5 years - by independent contractors, who take into consideration the sale price of similar properties.
Central government also calculates its own Government Valuation or GV for administrative and insurance purposes. This rating is usually conservative and lower than local RV’s.
You can also get an independent valuation from a registered valuer. This can be useful to both the buyer and the seller as property prices can change substantially within a 5 year council ratings cycle.
Quotable Value is New Zealand’s largest valuation company, and was formed from the privatisation of a former government department. They offer a range of valuations services, many of which are available online at www.qv.co.nz.
Legal process
House sales in New Zealand are governed by regulations to protect both parties, but it is also a free market where people can chose to conduct much of the process without consultation if they chose.
It is important to be aware of all legal aspects of buying a house in New Zealand, and to get good advice about checking each property carefully. There is a buyer's guide to legal and conveyancing issues on the conveyancing.co.nz website.
Legal action may be possible where someone has been wronged, but as with all such activities this can be a lengthy and expensive process - the cost of doing it right in the first place is one almost every house purchaser wisely pays.
There is competition in the market for these services, and you are entitled to know exactly what costs any agent, valuer, conveyancing lawyer or other service provider will charge. It is your right to be informed and to be able to compare.
Insurance
It’s important to make sure your house insurance starts on the day you take possession of the house. In some house auctions, you are responsible for insuring the house as soon as you purchase. In New Zealand, house insurance includes a level of cover for earthquake damage. You should also insure the contents of your house. Your insurance company can organise this for you.
Further information
See the comprehensive list of people who can help you with all aspects of buying your own home in the Living Guide
For a thorough introduction to house buying in New Zealand, check out this free guide from the Department of Building and Housing
This guide from the Ministry for the Environment also points out some issues to consider when buying a house
Detailed statistical information about specific areas in New Zealand can be found on Mashblock.
