Property Prices

How much does property cost in New Zealand?

In general, property prices in New Zealand are slightly lower than in Europe because of its small population (i.e. relatively low demand), low cost of land and generally lower construction costs.

There is, however, a huge gulf between Auckland and the rest of the country. Property is much more expensive in Auckland, mainly because most of the best paid jobs are to be found there. Auckland also has one of the better climates in New Zealand, and prices are further increased because a majority of immigrants make Auckland their first choice. Wellington is the country’s second most expensive area for property purchase. Price variations are less marked throughout the rest of the country.

After some years of large annual increases in house prices, 2005 has seen a relative slowdown in the property market, although certain commentators dismiss this as a blip and in summer 2005 (winter in New Zealand) there was no consensus as to what the market would do. The national average house price in New Zealand in December 2004 was $260,000, increasing to $265,000 in January 2005. However, when the second figure was released the president of the Real Estate Institute advised caution because reduced sales volumes and decreases in prices in some regions indicated that the market would begin to turn downwards. For example, in the Auckland Metropolitan area, prices fell from $355,000 to $340,000 from December to January, while in Auckland City, the average price fell from $412,500 to $385,000. In Wellington, price falls were much more modest, down from $276,250 to $275,000, although in Hawkes Bay, for example, the average price rose, from $225,000 to $245,050.

By early spring 2005 (autumn in New Zealand), areas which had seen some of the largest price increases in previous months, e.g. Nelson and Tasman, began to see falls. The Bank of New Zealand economist predicted that a housing downturn was imminent, and when it arrived, prices would drop between 5 and 10 per cent over a two to three year period. The Reserve Bank was more precise, predicting that average house prices would fall 4.8 per cent in 2006 and a further 1.9 per cent in 2007 (after having risen 56 per cent between 2001 and 2004).

But in early summer 2005 (winter in New Zealand), figures showed that the national average house price had risen to $275,000 (after a record figure of $280,000 in March and a fall to $272,000 in April) surprising the many economists who thought a downturn was about to start, following April’s fall. Prices had fallen slightly in a couple of regions, but in most they had continued to rise, with a notable narrowing of the gap in house prices between urban and provincial areas. This last trend was put down to jaded city dwellers escaping to life in the country.

The following average house price figures were released by the Real Estate Institute:

City/Area

Spring 2005 (autumn locally)

Summer 2005
(winter locally)

Auckland

$369,000

$370,000

Canterbury/Westland

$242,000

$247,500

Hawkes Bay

$230,000

$249,500

Manawatu/Wanganui

$155,000

$160,000

Nelson/Marlborough

$269,000

$265,000

Northland

$230,000

$251,000

Otago

$216,100

$201,750

Southland

$144,500

$150,000

Taranaki

$162,637

$213,750

Waikato/BoP/Gisborne

$244,000

$245,000

Wellington

$275,000

$285,000

Apartments are often as expensive as houses and townhouses (or even more so), as they’re invariably located in city centres, whereas most houses are in the suburbs or the country. Advertised prices are usually around 3 to 8 per cent above a property’s true market value and substantially above its rateable value.

When calculating your budget, you should also allow for lawyer’s fees and bear in mind that banks charge a mortgage processing fee equal to 1 per cent of the mortgage amount and require a deposit (usually $500 minimum) on application.

Lifestyle Plots

The term ‘lifestyle plot’ or ‘block’ refers to a kind of smallholding – a plot of (often) undeveloped land, usually in the country. Buyers of lifestyle plots tend to be independent, rustic types who yearn for a more rural way of life. They often build their own home on the plot (or have one built) and may keep horses or ponies or a few farm animals in addition to growing their own vegetables.

Lifestyle plots are available in many areas and are usually temptingly cheap. When buying a lifestyle plot, the main points to check are that mains services are available nearby and the cost of connecting to them, and that the land is suitable for agricultural purposes, e.g. the quality of the soil, and available water for irrigation. If you plan to keep animals, good fencing (preferably post and rail) should be included, as the cost of fencing a large plot can be high.

Finally, you should check any development plans for the area, as there have been a number of cases where buyers planning a life of seclusion have found some years later that their plot adjoins an industrial park or is divided by a main road. You should expect to pay around $275,00 for a small lifestyle plot (around 5 acres/2ha) or up to $750,000 if it’s within commuting distance of Auckland (the practice of working in Auckland and commuting to a ‘farm’ in the country has become popular in recent years).

This article is an extract from Buying a Home in Australia & New Zealand. Click here to get a copy now.

Further reading

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