The following information was correct at the time of writing; however it’s an ever-evolving industry so we do recommend doing your own research.
Are you having trouble deciding whether buying property in New Zealand as a foreigner is worth it? The truth is it’s a decision that needs thorough consideration. However, we are here to rescue! In this article, we will provide you with the ultimate list of pros and cons to help you make your decision. Read on to discover:
- the restrictions and requirements for buying property in New Zealand as a foreigner
- how buying property in NZ can be a lucrative investment
- the difficulties you will encounter while investing in NZ property
Can foreigners buy NZ property?
Let’s start from the beginning! While there are rules as to the minimum amount required and specific guidelines to how this must be done, the answer to the question “Can foreigners buy property in New Zealand?” is yes. To learn about all NZ investment rules and requirements for buying property in New Zealand for foreigners, check out our article.
The pros of buying NZ property as a foreigner
1. Buying new homes is safer
All building work in New Zealand must meet certain standards in order to be considered safe, healthy and durable. The country has a very effective building regulatory system that conducts regular checks and ensures all buildings are of top-notch quality.
2. Generously sized properties
Roomy properties with spacious gardens are typical in New Zealand. The average size of property sold in Auckland over the past eight years was approximately 135 square meters, and the average new house across the country is 195 square meters.
While this is smaller than Australia and the United States, houses in NZ are much larger than in most of the world, given the average size in Europe and many parts of Asia ranges from 76 square meters to 112 square meters.
3. Political stability
The country’s political stability positively influences property ownership. Investors who have dedicated time and resources to offshore property investment in NZ can take comfort and confidence in the fact that the country boasts one of the world’s most stable parliamentary democracies. Voters keep showing preference for the country’s two main political parties, meaning that foreigners can invest safely, knowing that there will be no sudden and dramatic change of policies.
4. Low crime rates
New Zealand is consistently ranked in international surveys as one of the world’s safest countries. This is a very important factor for property investors, as it means homeowners can enjoy a secure life without worrying about their children playing outside or their belongings being stolen.
5. Rapidly growing economy
New Zealand’s free-market economy is characterized by strong exports, advanced agricultural production, high net migration, strong tourism, robust construction activity, and low interest rates. This bodes very well for property ownership since the country’s exceptional economic performance creates jobs and draws people in who will eventually need housing and look for property for sale in NZ.
6. Swiftly developing housing market
New Zealand’s housing market has been described as being “on fire” currently, which is great news for property investors. With record-low interest rates, buyers are competing to secure properties, and there is more demand than supply.
This means that, at the moment, there is not enough property for sale in New Zealand. The number of houses on the market in New Zealand is at an all-time low, which means that it is a particularly good time for developers to benefit by pushing through with new projects.
7. Highly regulated property market
The country’s government is on top of the NZ property market, strictly regulating it with measures to tackle runaway house prices, prevent the formation of a bubble, and unlock more land to increase the housing supply. These measures go a long way in making new property buyers feel secure about their investments. For more reasons why New Zealand housing market and Auckland in particular are so hot now, watch this amazing video:
8. Fewer restrictions for Australian citizens
If you are an Australian citizen interested in buying NZ property, you’re in luck. Various long-standing arrangements between Australia and New Zealand mean that there are fewer restrictions for Australian citizens vs. nationals from other countries coming into the NZ:
- Australians are automatically granted residence visas.
- Australians in NZ have the same social security entitlements as New Zealand citizens (i.e. jobseeker support, sole parent support, superannuation, veterans pension, etc.).
- Australians may apply for permanent residence after having held a residence visa continuously for two years.
9. Buying NZ property is very quick
The process of buying property in New Zealand is exceptionally fast, normally taking as little as 3 or 4 weeks, which is much quicker than in many other countries. After a bid is formally accepted, there can be no last-minute offers. This eliminates stress for property investors and makes the process straightforward.
10. Availability of online information for foreign property buyers
There are many informative blogs and websites, which can be very helpful for foreigners living abroad who are interested in the property investment New Zealand process. Some online resources to guide you are:
11. Becoming an NZ citizen through investment
Investing in NZ property can help you get citizenship by grant, which comes with a lot of benefits for foreigners living in New Zealand! To read more about how foreign property investors can apply for citizenship in New Zealand, check out our article. Some benefits that come with NZ citizenship are:
- high quality of life: NZ’s Quality-of-Life Index is estimated at 175.61, which is exceptionally high compared to the rest of the OECD
- opportunity to find a well-paid job in NZ
- great public services in NZ (e.g. public transportation, emergency services, and courts/judicial system)
- high-quality education: the country boasts prestigious universities such as the University of Auckland, the University of Otago, and the University of Canterbury
- great health care system
- NZ’s official language is the world’s lingua franca (English), which many foreigners already speak as a foreign language
- NZ is a multicultural place, where you’ll definitely find a local community coming from your country. The NZ government does a lot to integrate immigrants into the community, from helping to assign them work that matches their skills and qualifications to offering pre-paid English language tuition to help them confidently use English and encouraging their integration into social networks and groups
- beautiful nature: New Zealand is a country that is famous for its stunning scenery, from vast mountain chains to grand volcanoes, lush rainforests, and incredible beaches
- nice climate: in NZ, which is relatively temperate and warm although, even alpine conditions can be found in mountainous areas, with a dry period in the summer
- NZ is an eco-friendly country. It is aiming to become 100% powered by renewable energy and has some of the cleanest and safest air on the planet
12. Dual citizenship
New Zealand allows dual citizenship, which can bring a lot of benefits for foreigners. Just make sure before applying for NZ citizenship that your country of origin also allows it!
Here is a list of countries that allow it: Albania, Algeria, Angola, Antigua & Barbuda, Argentina, Armenia, Australia, Bangladesh, Barbados, Belgium, Belize, Benin, Bolivia, Brazil, Bulgaria, Canada, Chile, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Jamaica, Kosovo, Latvia, Luxembourg, Malawi, Malta, Mexico, Nigeria, Norway, Pakistan, Panama, Peru, Philippines, Portugal, Romania, Russia, Serbia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Syria, Turkey, United Kingdom, the United States of America, and Vanuatu.
The cons of buying NZ property as a foreigner
1. Property is expensive and prices are rising
While the answer to the question “Can foreigners buy property in New Zealand?” is yes, you have to keep in mind that the NZ property market is buoyant, which means that houses are very expensive. During the last quarter of 2020, we saw an average 8.7% increase in New Zealand property prices across the board.
When it comes to NZ property for sale, in Auckland City the average house price was $1,088,250 and even Manukau City hit a new record topping $1m. Sufficient funds to afford these high prices are the number 1 challenge faced by most potential buyers.
2. There are strict regulations for foreign property investors, especially if they don’t intend to live in New Zealand
As a foreign investor, you have to abide by certain laws and regulations which can be very restrictive, especially if you do not intend to live in the country. The OIO (Overseas Investment Office) requires you to demonstrate that your property purchase will benefit New Zealand in certain ways, for example by increasing the available housing stock, providing accommodation to vulnerable groups, or benefiting the community if the property will not be residential.
3. The property you buy must meet certain requirements
Non-residential property must make a contribution to New Zealand’s economy or society (through rental income kept in NZ$) and must not be meant for personal use. To find out the specific requirements in more detail, head to our article.
4. Foreign buyers must hold an NZ bank account
Non-residents will have to open an NZ bank account to buy property in New Zealand, which can cause some difficulties. While it is quite easy to open a bank account in New Zealand from overseas, you will have to personally visit a branch to activate it once you arrive, so it cannot be done remotely. Still, New Zealand banks offer many account options suitable for ex-pats.
5. If your final goal is to get NZ citizenship, the property is not a golden ticket
To obtain New Zealand citizenship you must prove tax residency amongst other things. The property will not allow you to sidestep the many requirements.
6. Achieving New Zealand citizenship is a slow process
Once you are in a position to achieve citizenship, you will find that it is a long, drawn-out process that, in fact, can take several years, so you have to be patient and truly committed to your NZ property investment.
7. New Zealand has a very high cost of living
Potential buyers must bear in mind that the cost of living in New Zealand is very high, on average 10% higher than in the United States.
A single person’s estimated monthly living costs (excluding rent) are around 1,325NZ$ (US$1000), with rent for a small apartment clocking in at around 2,239NZ$. For a family of four living costs rise to nearly 5,000NZ$ excluding rent!
8. Distance costs money
New Zealand’s remote location may mean that, unless you are from Australia, you will spend a lot of time and money on flights while you go through the New Zealand property investment process.
9. Local representation is crucial for success
As a foreign investor buying property in New Zealand, non-resident advice from a representative with local expertise can be a crucial decision for the success of your investment. However, help is at hand. At CGPM, we specialise in guiding foreign investors through the whole property management process and offer unparalleled local market advice. Make CGPM your first call, and we will help you on your investment journey!
New Zealand’s lucrative housing market
The New Zealand property market clearly represents a hugely attractive and lucrative opportunity to foreign investors. New Zealand’s safe and politically stable environment combined with high property appreciation make fertile ground for growth and yield high returns. However, the myriad national regulations necessitate local knowledge to ensure your foreign ownership of property in New Zealand goes smoothly and your investment is profitable.
The pros plainly outweigh the cons once you fully explore the investment opportunities. The ultimate decision is up to you but the experts at CGPM are waiting to answer your questions and guide you through all the stages of the property management process.
