Homes & Relocation Detail
New Zealand property slump?
As predicted the property slowdown in New Zealand has begun and the average price of a house in the country fell to NZ$295,000 in December 2005 from a record high of NZ$300,000
According to sales figures released by Auckland's leading real estate firm, Barfoot & Thompson, the number of sales made in Auckland was the lowest in five years. Barfoot & Thompson has the largest market share in Auckland so its sales figures are a key indicator of real estate trends.
The company recorded 797 sales in January, the slowest start to the year since January 2001. This followed a slow December where just 671 sales were recorded, well below the company average of about 1,000 a month. Prices followed the trend, with a 13 per cent decline in the average sale price from NZ$492,882 in December to NZ$428,385 in January and a nine per cent decline year-on-year. The slowdown is largely affecting the upper half of the market.
However, small sleepy towns, particularly in the North Island are bucking the national trend. New figures show Otorohanga, Kawerau and Wairoa have recorded staggering growth in real estate values as city dwellers clamber for bargains.
Statistics out from Quotable Value New Zealand show basic and practical are now the big winners in real estate. Homes in the NZ$100,00 bracket in Otorohanga, Kawerau and Wairoa were all up about 50 per cent on prices a year ago – late starters in what was a property boom. Investors are moving into these smaller localities to pick up both a good return for rental and to see big capital gains.
For two years there has been talk of a property slowdown, and now analysts say despite there still being strong growth around, the cool off has begun. It is thought that flattening house prices would drag on other areas, including holding back consumer spending. One-third of all mortgage holders in New Zealand would also more than likely experience rising fixed rates at some stage this year.
The question of whether this is good news for Brits looking to buy property in New Zealand remains to be seen. It's likely to be good news if you are looking to relocate to New Zealand and are after a bargain, and not so good news if you need to take out a mortgage to do so. If you are looking to make money on a property you would be wise to look to the smaller towns.
Top ten tips for buying in New Zealand
To help with the buying process it's sensible to employ a local solicitor when youre ready to make an offer. Their role is similar to solicitors doing conveyancy in the UK.
Do your research. Make sure you buy off a quality developer in a good growth area. The building regulations in New Zealand are pretty good compared to many other countries. However, you still need to show some caution.
Have a plan. Do you want a place that is low maintenance or that you can add value too? Are you looking for an investment property? Ideally you should be looking at holding an investment property for a minimum of ten years, as this will allow time for capital appreciation.
Get good advice at the start of the buying process, not halfway through. This saves both time and money.
If you are emigrating to an unfamiliar place it can be a good idea to rent for a while before buying to make sure you are comfortable in the area.
Remember that if you are taking out a mortgage in New Zealand you will need a 20–25 per cent deposit, unless you are classified as a New Zealand resident.
There is normally no stamp duty or capital gains tax to pay in New Zealand. Beware that an exception to this is if you buy and sell in the short term and have been classified by the Inland Revenue as property trader.
Once you've found your dream home a formal offer is presented in writing that is conditional upon mortgage approval, valuations, searches and related sales. The next step is signing the contract which makes the sale unconditional meaning there are financial penalties if you don't proceed.
Make sure you are not paying over the odds for a property; if you are buying in an area you are unfamiliar with. It is essential to get an independent valuation.
If you are looking to buy a property that will increase in value, bear in mind that like any country certain areas in New Zealand are a better investment than others. A good economy, good facilities, good schools, good transportation links and normally being close to a city are all important factors.
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