Investing

Can I use money in my KiwiSaver account to help buy a home? Can I use money in my KiwiSaver account to help buy a home?
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Professional Looking to Invest Q & A

How can I make money out of real estate?

New Zealand's real estate investors make their money in two main ways:
 
  • An increase in the value of the property over time – known as a capital gain.
  • Collecting the rental income generated by leasing residential or commercial property to tenants.
Housing and commercial properties have traditionally doubled in value every 7 years for the past 50 years or so.  Whilst historical performance is no guarantee of what will happen in the future, it provides an indication of possible future trends.

The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.
 

Can we make an offer on our next property, subject to the sale of our first?

Yes, you can make conditional offers on property, by including conditional purchase conditions into your New Zealand Property Sales and Purchase Agreement. These terms are reasonably common in New Zealand, although there are some downsides:
  • If your sale falls through, or takes longer than expected to settle, you may have to watch your dream home go to someone else.
  • If you’ve put in a conditional purchase offer, this may place pressure on you to sell faster, and for less money, than you might have otherwise sold for.
  • Some sellers, particularly in competitive markets, may be less willing to accept conditional offers. A lower offer from a competing buyer without any conditions may be more appealing because it offers a quicker sale and greater likelihood of the sale completing for the vendor.
  • If you haven’t sold your current property yet, you won’t have as much certainty about how much you can afford.  This can lead to you overextending financially, and it also limits your opportunities to bid successfully at auctions.

I’m planning to buy. What rules should I follow to ensure I make a good investment?

When you're buying real estate for investment purposes, the location is really important.  It's often said that you should buy the "worst house in the best street", rather than the "best house in the worst street", because good (or up and coming) housing areas tend to hold their value better than neighbourhoods on the decline.
Buying your home in a well-connected and popular location that has the potential for further improvement is a logical approach.  When buying, look for:
  • Houses that are close to shops, parks, good schools and transport hubs.
  • Houses or apartments that can be renovated or freshened up relatively cheaply. If buying in an apartment block, be aware of the standard of other apartments in the block, tenancy profiles (and likely noise), and amenities.
  • Real estate that is close to recreational facilities, sports clubs or other amenities that are likely to be popular with the general public.
  • Housing that is positioned for energy efficiency (north facing).
  • Homes that are well insulated, in the floors, walls and ceilings.
  • Real estate in suburbs which are likely to see significant development.  
Real Estate New Zealand provides a helpful property inspection checklist

What sort of process is followed in a property settlement following a divorce or separation?

Dividing property or other assets following a divorce or separation can be achieved by a four step process with the Family Court.  The steps are as follows:
  • Application for Settlement: An application is made to the Family Court for a Property Division Settlement. You will be required to file information about the relationship, including the length of time you have been together, and your reasons for separation or divorce.  Your application should also include a proposal for dividing the property and other assets held (e.g. family home, other property, savings, superannuation, shares and investments).  Your personal debt and liabilities details will be requested, to assess your individual financial situation.
     
  • Judicial Conference: The Judge will call a meeting to discuss how the case will proceed, and to determine what items the partners already agree on.
     
  • Settlement Conference: The Judge will hold a conference to see if the partners can agree together on how best to divide their property. Lawyers for both sides are able to participate in this if desired.
     
  • Hearing: If the partners can’t agree, the Judge will hold a hearing and make a legal ruling as to how the property will be divided.
 

Can my parents help me buy my first home?

Parents or other family members may be able to help you to secure a loan that would otherwise be out of your financial reach.  There are a variety of options available for parents who wish to help, which are listed below:
  • If your parents or other family members are willing, they may be able to use the equity in their own property to help you buy your first home sooner. In this instance, they would take out a mortgage on their own property (and pay necessary interest), to provide you with the cash to make up your deposit.
  • If you don’t have a large enough deposit to meet the lender’s criteria for a loan, but you do have the ability to service that loan, lenders may allow your immediate family members to use the equity in their own home as security for your mortgage. In this instance, your family members do not take out a loan themselves, but their property is used as security on the loan (and can be sold if you default).  This is more palatable to some parents / family members.
     
  • Another option is to take out a “Family Equity Loan”.  This arrangement makes yourself and your family member joint borrowers on the mortgage. Both are responsible for repayments.  The debt servicing calculations are based on the incomes and expenses of all borrowers.
With all of these options there are risks involved for your family member. If you can’t keep up with your mortgage repayments, your parents may be required to pay off the remainder of your loan or, even worse, sell off their own home to cover your debt. 

Can I use money in my KiwiSaver account to help buy a home?

If you’ve been in New Zealand's KiwiSaver superannuation scheme for at least three years, and are buying your first residential property (to live in), you may be eligible to withdraw money to put towards a home loan deposit. Where this is possible, you can withdraw your own contributions and your employer’s contributions, but not the $1000 New Zealand Government kick-start or any tax credits.

The KiwiSaver website provides further advice about this.

​Where can I get help?

At First National Real Estate, we're here to help you. Contact a First National Real Estate agent prior to moving into their area, and get chatting. They are well placed to give you general information and advice about your upcoming move.   They can also add you to our database of potential property buyers or renters, and can send you updates when properties that suit your needs and preferences become available.

What counts as relationship property?

The Relationship Act defines relationship property to include:
  • The family home.
  • Any household furniture and fittings, regardless of when they were purchased.
  • Any jointly owned property, or property purchased by a partner before the relationship began that has been in common (joint) usage.
  • Most property acquired after the relationship began (with some exceptions).
  • Financial assets such as shares, cash or other investments, that have been created (or contributed to) during the relationship.
  • Insurance policies related to any of the relationship property described above.

What’s the difference between ‘Auction’ and ‘For Sale’?

The three most common ways to sell residential property in New Zealand are via private treaty sale, auction, and tender.

Private Treaty Sale
This is the most common method for selling a house in New Zealand. A property will be advertised “For Sale”, with a fixed asking price or explicitly stated price range.
  • Interested parties make offers and negotiate with the seller through the seller’s real estate agent
  • The agent may be negotiating with several parties at once and acts under the instruction of the seller
  • When you commence a negotiation, it’s important to be serious and respond quickly, fairly and decisively
Auction
An auction involves prospective buyers bidding against each other at the same time, with the property being sold to the highest bidder.  Home auctions are becoming increasingly popular in New Zealand, especially in popular cities like Auckland where there is limited house supply and a large number of buyers in the market.
  • The property will be advertised for a set period of time during which potential buyers must complete all of their enquiries (legal, building and any other relevant inspections), arrange their finance & be ready to bid
  • On the day of the auction, buyers (or their agents) put in competing bids until the highest bid is reached and no one is willing to bid any higher
  • Prior to the auction commencing, the seller will have informed the auctioneer of their ‘Reserve Price’. This is the minimum price they are willing to accept.
  • If someone makes a bid that is at or above the reserve price, the auctioneer will declare that the property is 'on the market' and the property will be sold to the highest bidder
  • If the reserve price has not been reached, the seller has the option to lower the reserve price and start the bidding again. Otherwise, the person who put in the highest bid (below the reserve price) will be given the first option to purchase the property at the reserve price
  • It the highest bidder opts not to purchase at the reserve price, the property is considered back on the market and any other buyers may negotiate with the seller (or their real estate agent)
  • If the property has been sold, the successful bidder must sign the Sale and Purchase agreement and pay a deposit (typically 10%) straight away.

Tender
A property sale by tender is a hybrid selling method. It involves a set tender period during which the seller will accept offers.
  • Each buyer submits a confidential offer in writing to the real estate agent.
  • At the end of the tender period (“tender day”) the seller will make their decision.
  • There is no reserve price and the seller is free to accept or reject any offer they wish to.
  • Often a deposit will need to be submitted along with the offer. This is refundable if the offer is rejected.

I’ve found a house that is For Sale. How do I make an offer?

When you're ready to make a formal offer to purchase a house in New Zealand, there are a number of steps that are typically followed.
  • Normally you will make your offer through a real estate agent using a standard Sale and Purchase Agreement.
     
  • The real estate agent will present your offer to the owner, using the Sales and Purchase Agreement. If the owner accepts your offer, they will sign the form and this document will become a legally binding sale contract.
     
  • The seller may want to negotiate first, in which case they could make a counter-offer, or simply reject your offer and ask you to improve it. During these negotiations, the real estate agent will provide some guidance (for both owner and buyer) on what they think is a more acceptable offer.
     
  • Once the owner accepts your offer you will both finalise the Sale and Purchase Agreement. This agreement is legally binding, but you are both allowed to add conditions to the agreement which provide a right to back out of the deal if not met. Common conditions include making the purchase contingent on securing finance, selling your previous home, receiving the results of a building inspection, or having the seller make repairs.
  • Once you’ve signed the Sale and Purchase agreement, you'll need to pay a deposit to the real estate agent (usually around 10% of the purchase price). The real estate agent holds these funds in a trust account.
     
  • When your house sale goes Unconditional - i.e. when all the conditions included in the Sale and Purchase Agreement are met - the agent will deduct their agency fees and then pay the balance to the seller.
     
  • House sales in New Zealand do not have a cooling off period allowing a change of mind. Once you’ve signed a Sale and Purchase Agreement, there is no backing out of the transaction unless any of your conditions are not met.
It is always wise to seek qualified legal and financial advice before signing any agreement, if you are unsure of your own ability to protect yourself from risk.

We’re ready to downsize our home. Where do we start?

Once you’ve made the decision to downsize your home, you can look forward to life changes with significant benefits.  First National Real Estate is with you every step of the way.  Contact one of our real estate agents today to start your new property journey.
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