Finding Your First Home in NZ

Presumably you've already decided to buy if you're reading this, but it's worth considering if you're in the right place in your life to buy (e.g. do you want to move in the next 5 years, would you rather save more deposit, are there big career changes you want to make which might involve studying and having no income, if you want to travel for 3-6 months it can be a bit harder to rent out for short periods of time) and factor them into your decision. Buying gives you stability and not needing to rent.

Keep in mind that everyone always says it's the best time to buy - if prices are low then it's a 'buyers market' and if they're rising then you 'gotta get in before prices go too high', no one definitively knows for sure.

Moneyhub has some good pages about other options: Rent to Own, Buying vs Renting 

Before seriously looking, I highly recommend making a personal budget to inform your max price.

It's easy to get preapproved and get carried away thinking this is how much you can afford - this is how much the bank will lend you, but that might not work for your life.

You don't have to do this before looking at houses, but definitely before you commit on what price of house you want.

For people who love Excel/Google Sheets, this link contains a spreadsheet I made to do my own budget. You enter the amount you earn per week after tax, mortgage repayments and expenses, and you can see how it adds up. In the end it will tell you how much money is leftover (which can be in the negatives if you're overspending!).

It puts things into perspective - if I pay 50k more on the house, it'll cost me about $50 a week of this other thing I enjoy - is that worth it? After all, you're going to be paying this off for 30 years (usually) which is a long time to be in financial strain.

What to include

You can make it as simple or extensive as you like.

My spreadsheet has every unexpected expense I could possibly think of so that you can keep or delete whatever you have.

I would make the budget off what you're currently spending, see how it adds up, then consider what you could cut if it doesn't work out (keeping in mind you've got to keep it sustainable!).

Stress test it

Stress test your cost of living - see what happens if all the regular costs go up 10% (groceries, rates, insurance etc) and whether you'll still be okay.

Google a mortgage calculator and stress test the interest rate - if it's lower than 6 % then see how much your mortgage would be with that. Interest rates historically have sat around this, much higher than the recent low COVID rates in 2020 - 2023.

Budget for future expenses - e.g. if you want kids, there'll be maternity/paternity leave, day care etc.

We would recommend start the process of getting a preapproval with the bank, and finding a lawyer and builder ready to engage. See the Due Diligence section for this.

Note to withdraw your Kiwisaver you need to have been part of the scheme for at least 3 years.

Think about what you want in a home - my “Open home checklist” contains a checklist to prompt some ideas. You may want to consider what style of house you want - see Kāinga Ora page.

If you're ahead of time, it's a good idea to start reducing how much you spend on luxuries in the 6 months - 1 year before you go for preapproval (looks good to banks). Start spending how you plan to when you have a mortgage and see if this is realistic. Pay off loans and save for the deposit.

We suggest looking 'casually' before starting to look 'seriously' (with intent to buy).

About signing into open homes:

If you give your details, the real estate agent will always try to call you to convince you to buy the home. 

For homes you aren’t that interested in buying and are just looking we would:

1. Get a separate prepay SIM card OR put an incorrect phone number (start it with 025 etc).

2. Create a different email address specifically for house stuff.

3. Less effective: Put “Do not call” as our last name to make intentions clear. 

We'd prefer not to do this, but agents did not comply when we asked them not to call. Ticking the ‘do not contact’ option on their form didn't work either. They aren't obliged to your personal information. 

Advice about the house hunting process:

Take your time! I would prepare to spend 3 months window shopping to understand your needs, wants, things that bother you.

You get more objective as you go and notice little things, like the staging (some homes they literally use fake beds that are smaller than true double beds) and them turning the lights on to make it seem brighter.  Investigate different suburbs and styles of home (e.g. townhouse vs house with section). Look at the house layouts, how things will fit, what you like.

As well as understanding what you like/need, you want to understand the market and what's below/at/above your price range. You'll learn how much you have to compromise vs how picky you can be by seeing what houses you investigate end up selling for.

Property search tips

It easy to get fixated on new listings, we would recommend carefully making a 'favourited list of properties your interested in on trademe.If you have the app, and you favourite properties you like, it will give you a notification if a price drops or the sale changes between auction/deadline/price by negotiation etc.

Trademe will show you new houses in the location, of the land area range and of the type of houses in your favourite search. TOP TIP:  once all set up you could stop fixating and delete the app off your main phone. You should get an email every week with a breakdown of new houses radius! 

Often deadline sale will change to price by negotiation, this can either mean they have accepted a conditional offer (and due diligence is being done) or no offer has been accepted. Just ask the agent what happened if you were interested in the property, and once it sells you can ask them the sell price by text.

Vet out homes! 

We looked at a wide range of open homes at the start and got a good idea what we wanted. Once we had a good sense, we only went to open homes we thought were potential buys (it gets tiring going to too many). We'd review some documents online (vendor building report if available) and do basic due diligence about the area before even going to the open home and make a judgement at the open home if we wanted to buy or not, then proceed from there.

There's a lot to weigh up with suburbs, but think about your daily life and what's best for that.

1. Affordability: Buy somewhere you can afford.

2. Commute:

   • If you work full time, that's a trip there and back 5 days a week, which eats time and money, and mental health! Just something to keep in mind before you buy the dream home 40 minutes out of town.

   • More than 15min (2.5hr a week) of commuting is associated with decreasing mood, and 40min+ (6.5hrs a week) is associated with reduced life satisfaction. (Source)

   • If getting somewhere where you can bike or walk that's ideal (though may be unrealistic). Scope out public transport options too.

3. Natural hazards: NZ has earthquakes, floods and coastal erosion. See the flood and earthquake zone tools on the website front page under "Masterlist of Resources".

4. Community vibe and safety: Go walk around suburbs you're interested in to get a feel. Check the Police crime record.

5. Local amenities: supermarkets, cafes, gyms, parks, your hobbies...

6. School zones

7. Types of homes: Does the suburb have the kind of home you're looking for? (e.g. townhouse, apartment, house size). Often suburbs have a lot of homes built in the same time period e.g. a ton of 1970s homes, if you care a lot about the time period.

Some people use a ‘buyers agent’ - it’s a real estate agent that helps you look for houses. The agent you see at open homes is the 'sellers agent' who is selling the house on the seller's behalf.

For a buyers agent, their reward is they get half of the commission (the buyers agent and sellers agent split the commission, instead of the sellers agent getting it all). Note buyers agents are incentivised to get you to buy quickly so they can move on to another buyer/vendor. 

They may be biased towards homes sold by their agency. You also may be restricted in that you cannot go to an open home by yourself, or your agent could tell you off  out of fear of missing out on their share of the commission.

Opinion: We personally didn’t see it worth having a buyers agent, there aren’t so many houses you can’t just screen them yourselves (in our chosen suburbs there were maybe 5 a week new listings to vet). As mentioned above, buyers agents are incentivised to get you to buy quickly, hold firm and take your time. 

Private sales are good but pretty rare. We saw a very good house sell at a great price by private sale. The couple were very professional, knowledgeable about the house, overall did a fantastic job. There was another house that was private sale which we found some consenting issues, but it was easy to liaise with the vendor about them. We found the experience more transparent.

It's no riskier than buying from an agent because the ultimate responsibility always falls on you to do due diligence. The main difference is that you are skipping the middle man.

The good thing about a private sale is, you can ask the vendor questions directly. They have less ability to say ‘I don't know’ like an agent can - as they lived in the house, they would naturally know if they did any unconsented renovations, or if there were any issues with the house. You can also negotiate directly!

Looking at past sales will help you decide what price range of house you want to go for. This will be refined as you look at open homes and spend time in the market.

Tracking what houses sell for:

We kept all our open home pamphlets and when they sold we wrote the price on them for reference - active proof of what the market is doing.

Ask the real estate agent once the house dissapears from trademe/other site -(likely sold) and the agent may tell you what it sold for! It takes 3 months for the sold price to go on www.homes.co.nz or www.realestate.co.nz.

For auction results: https://www.interest.co.nz/property/residential-auction-results

Look at past sales to set expectations:

Look at some past sales on Homes.com/real estate.co.nz/ and vetting them as if they're open home listings - to see what you can realistically get for the price in certain areas. Note sales on here will be about 3 months behind. 

Look for things that add or detract value like whether it's on a main road, floor area, garaging, whether it seems sunny etc.

Homes on desktop is the most convenient way as it has lots of filters, it’s might be slow on your phone.

This also gives you an idea if what you want is available in your suburb (e.g. you’re looking for a townhouse but your suburb only has older houses with land) and how often it comes up.

E.g. if you can find 5 houses on Homes that sold in the suburb that you want, then you can very approximately expect around 5 houses to appear on the market over the next year that you'll be interested in.

When you feel like you have a good idea of the market and what you want in a house, this is a good idea to start looking more seriously and evaluating each house - thinking whether you want to offer on it, and what price to offer.

The next sections - Evaluating a House, Valuing a House and Due Diligence - will go through the details of this process.

NOTE: Make sure all your conditions are written in the S and P if you offer. These should include: subject to finance, builders report, LIM and potentially insurance. 

The offering process in general

For most markets, I think you would need to be prepared to offer on multiple homes and miss out on them before getting one. Keep an eye on the market, and view houses the very first open home (do an extensive review on the open home, review the documents).

If you decide it's a good house for you, it's worth offering pretty quickly or at least being mentally prepared to offer or not offer. Houses that aren't desirable sit on the market for months, but good ones often get offers quickly. 

• If someone else offers, the real estate agent usually calls around asking for other offers. The agent is usually motivated to get the best possible offer, so you won't miss out on offering. However, if this happens you have to decide relatively quickly, so it's good to already have a judgement if you're gonna offer or not.