An insider’s guide for AIP Golden Visa holders looking to buy or build property in New Zealand. 37 years of construction industry experience, 25 years in New Zealand, no real estate spin.
1) Introduction: The New Zealand Property Market for Golden Visa Buyers
New Zealand is a young country with a broad architectural style and few design limitations. If you can dream it, you can create it in most locations, provided you can afford it. There’s a building code but no design code. Being a young country, there are very few buildings deemed historic or heritage listed, and even with many of those we have to ask why.
Property is the main source of wealth for most Kiwis, so the government is very careful not to add taxes like capital gains or stamp duty on your main residential property. They will not gain many voters if they do. That’s not to say our councils and government aren’t trying their best to introduce fees and taxes as discreetly as possible, but for the time being the main tax is the council rates, which varies by region and is based mainly on the property’s perceived value, rather than residential burden on the council. I don’t agree with that approach, especially on rural properties that don’t receive many council services.
That said, it’s rare for property to suffer dramatic losses in value, but gains are commonplace. That’s why even the most dire property has a relatively high asking price.
Many of our clients struggle to acclimatise to existing market asking prices, especially at the high end where vendors will seek extravagant asking prices for ho-hum properties. The arrival of the AIP+ Visa (sometimes termed the golden visa) and the $5M minimum threshold for some citizenships has excited the property sector in the $4M plus bracket, with many properties trying to eke into the $5M asking range. Real estate agents are super excited, as you’d expect, with low historic sales in this upper market now finding many more potential buyers.
Even in a recession, property still tends to be a safe bet for those playing the long game, especially at the time of writing. The New Zealand economy has been struggling for many years, and many distressed sellers are stifling property growth for the foreseeable future.
Opportunities are there for the prudent buyer who is willing to undertake a thorough search and due diligence exercise. As ever, don’t rely on the vendor’s agent for property or location advice. Rely on your own due diligence before making an offer anywhere.
2) Location, Location, Location: Choosing the Right Region in New Zealand
New Zealand is larger and more varied than most people expect. Climate, landscape, pace of life, the standard of schools and medical facilities, even building costs can vary considerably from one region to the next. The right place for one family is entirely wrong for another.
Visiting a popular tourist destination is fun, exciting, and can be quite emotional. Hopefully it’s an unforgettable experience that makes the usually depressing and invariably long journey home worth it.
But living in these tourist destinations is often quite different, and in my experience it usually is. Take the food scene. Many restaurants cater to the tourist market and expect only one visit from each customer, so their standards may not be consistent, or even good. As a local, you’ll tend to avoid those places. The restaurants that aren’t tourist focused may be few, and easy to get bored of. I know my own experience of living in a popular tourist destination 20 years ago was exactly that. Underwhelming. After a few years I moved out.
When it comes to living in tourist hotspots, the most important factor in my book is knowing the property industry and local support network: gardeners, cleaners, and maintenance contractors. Maintaining, renovating, or building new can cost double, triple, or even more compared to less touristy areas. For visa holders who may live in New Zealand for shorter stays each year, this can be an unwanted surprise and ongoing burden. In fact, it’s one of the biggest concerns our new clients raise.
And buying property in the wrong location happens a lot. I know of one recent case where an AIP Golden Visa holder made a $15M+ offer on a house in a place I personally wouldn’t live. When asked why, he said a tourist on the plane had told him the area was nice. Luckily, he didn’t conclude the purchase, due to factors outside his control, but he could easily have been left with a very expensive and overpriced mistake in a location that’s very hard to sell at this end of the market.
I live in Auckland, in the countryside, in a lifestyle area where land and privacy create my ideal home environment. I can drive 20 minutes or so to the central city (outside of rush hour, of course), where I have a choice of many good restaurants and bars. I also have relatively quick access to beaches, forest, vineyards, malls, cinemas, good schools, medical facilities, and an international airport within an easy drive. I have more options for entertainment, and I can still jump on a domestic flight and be anywhere in New Zealand within an hour or so. For me and my family, that seems the right balance.
Everyone’s requirements are different, so my advice is this: don’t just look for property in the areas you’ve already visited. Spread your wings, visit less touristy regions, and see for yourself the difference in value and choice you get. If nothing else, treat it like a holiday, exploring a new place and looking at a few properties along the way. If you’d like help with this, we have a dedicated service called Privé Local. It’s one of our most popular services, and there’s no added incentive on our side for you to buy property.
3) New Zealand Property Quality: The Uncomfortable Truth
I’m sorry to say that the general quality of homes in New Zealand is quite poor relative to the investment many people make. New Zealand is stuck building lightweight timber framed homes that aren’t particularly well made, use some pretty terrible materials and chemicals, and are very poorly insulated. To highlight this, over 56% of New Zealand homes, both new and old, are classified as too unhealthy to live in by Asthma New Zealand. This is mainly due to poor insulation and ventilation control. In fact, our building code now encourages airtight homes but doesn’t require ventilation or air movement control, which is actually making our homes worse because of inadequate vapour and moisture control.
I’m not trying to alarm you, and this is a problem in many countries, but when you’re spending a lot of money on a property you should make sure you’re not buying a lemon, or worse, an unhealthy lemon that may cause illness.
Just remember, many of the homes you’ll see may be luxurious, extraordinary even, but that doesn’t necessarily mean they’re well built, healthy, energy efficient, or comfortable to live in.
4) Popular New Zealand Building Methods (and Their Flaws)
Timber ‘Stick Built’ Homes
In New Zealand, the most popular building method by far is lightweight timber frame, sometimes known as stick built. It’s typically a 2-inch by 4-inch structural timber system clad in building wraps, gypsum board, battens, and external cladding, with insulation, cabling, and plumbing all crammed into a 4-inch cavity. It’s quite a mission. Even many $10M+ homes are built this way, and it’s much the same way many countries built 100 years ago. Not much has changed, except that build efficiency has actually got worse and more expensive. I say this from experience. As I draft this post I’ve been in the building and construction industry for 37 years, starting in the UK and slowly making my way around to the opposite end of the world, and 25 years in New Zealand now.
New Zealand went through a period not so long ago when designers and builders made many mistakes and the country (mainly Auckland) ended up with the leaky home crisis. It predominantly affected timber framed homes, so instead of raising design and building standards, councils insisted on treating the structural timber instead. In my opinion that was simply like putting a band aid on a broken leg, and it made little sense. Treating timber isn’t environmentally sound, it adds a lot of cost, and it introduces moisture to the timber that aids twisting and splitting as it dries out within the wall. This is why many walls in New Zealand homes aren’t straight, especially in cheaper spec houses. Oh, and let’s not mention the toxic chemicals used in the timber treatment process, many of which have been banned in nearly all other countries around the world.
If you’re going to use the stick-built method, I strongly suggest you move up a timber profile size or two to create a thicker wall that can accommodate more insulation and strength.
Concrete Block
Many more expensive homes are built with concrete block because the perception is that you’re getting a stronger home. The reality is that you get a colder home, and one whose wall may fracture and crumble in an earthquake. By the way, New Zealand often records over 1,000 earthquakes a year, though most are tiny and not felt – so don’t let that worry you, but it should make you think about your house resilience.
Block construction is a very slow build method, highly labour intensive, not particularly environmentally or energy friendly, and costly. To date I haven’t used it in any of my builds because I feel there are always cheaper and better building systems available. Real estate agents rave about block built homes, and I have no clue why.
Light Gauge Steel Frame
Many group home builders have turned to light gauge steel frame as an alternative to stick built timber, primarily due to the rising cost of treated timber. It’s also quite popular in Australia. I once visited a group home builder’s show home in Auckland that used this method, and as someone walked through the front door, the wind caught it and slammed the door shut. It seemed like the whole house reverberated. Maybe that was just a bad example and not refective of the building system as a whole, but worth a test before choosing. Feedback from owners has tended to include problems with Wi-Fi signal, challenges making alterations, and lots of thermal bridging (hot in summer, cold in winter).
Alternative Building Methods and Passive House Principles
Okay, if you’ve made it this far, I doubt you’re feeling impressed, but that’s the reality of housing quality and using outdated building methods in many countries. We’re slowly, even glacially, seeing a few housing projects adopt advanced building systems like mass timber (massive timber), but it’s extremely expensive, and many of the designs we see don’t optimise the use of mass timber in a way that makes the build more cost effective. They also try to incorporate mass timber into traditional building methods, which makes very little sense. The truth is that we have an awful lot to learn from the Scandinavians, Austrians, and Germans about building affordable and sustainable homes.
In short, I strongly recommend engaging a designer and a specialised building consultant who has built their own home with their own money. Adopt some Passive House principles in your design (it doesn’t need to be Passive House certified to be a great home), and look at alternative, more advanced building systems. Many architects don’t really understand building systems or the products and materials they specify. They are designers, not building specialists. Use them as designers, but get third party help on the structural and product specification side of things.
Many builders will only work with one building system, so if they haven’t renovated or built new using your preferred building system, I’d look elsewhere.
Many luxury home builders are popular with the wealthy, but that doesn’t mean they’re good. Some of the smaller building companies are far better. I know plenty of luxury home builders who charge like a wounded bull. They are simply too expensive for the quality they deliver.
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5) Summary: Buy Existing or Build New in New Zealand?
Realistically, you have two choices in New Zealand:
1. Buy an existing house and renovate. I don’t know many people who buy a luxury home and don’t remodel. Get the house thoroughly inspected before buying, and understand how it was constructed. It’s also important to know the condition and remaining lifespan of major materials and elements like the roof. 99% of houses won’t last forever. Renovating some houses can be slower and more costly than building new. Even excellent products and materials installed poorly will fail. Most houses that haven’t been properly maintained will endure bigger and costlier problems earlier in their lifespan.
The upside is that you get something you can move into straight away. The grounds are likely to be more mature and established, and the risks can be lower than building new.
2. Buy land to build on. For me, building a house to your own specification is a very rewarding journey. Yes, it can be painful at times, but the upside can be truly amazing, a life achievement even. If you employ the right designer and build team, and they work together from day one, you can end up with something cost effective and special. It can be carbon negative, off grid even, and stronger and more sustainable than nearly everything on the market. It’s your build, no compromises, almost an adventure. But it’s slow, and use the wrong trades and designers at your peril.
New Zealand isn’t unique in its challenges getting through council. Like many countries, costs are simply out of control. It’s the wild west. Existing housing supply is expensive and generally uses unsustainable and unhealthy materials. Many homes are unhealthy and uncomfortable to live in, but the majority of the building industry will deny this. The best decisions you make at the very start of the project will ultimately determine how well it goes. Whether you buy existing or build new, there are rewards if you understand the rules and don’t take shortcuts.
Good luck to one and all.
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