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Rent or buy?

The Rent or Buy report for February 2020 - New Zealand

21 February 2020

A monthly assessment of renting a property versus taking out a mortgage.

To buy or to rent, that is the question...

The purpose of this Report is to help you decide when to move from renting to owning. The indicators in here show whether you should continue to rent-and-save-for-a-deposit, or when the time is right to buy.

For many, the goal of owning your own home remains a powerful objective - one we support. But affordability issues can be serious barrier to achieving this, and renting is often seen as a ‘second best’ outcome – what you are left doing if you can’t afford to buy.

However, this Report is aimed at renters who want to buy, and suggests when conditions are appropriate to make the move from renting to owning.

Market overview for January 2020

The national median house selling price has increased to $615,000 in January, decrease from $629,000 the previous month. Annually, the growth is recorded at 11.8% against last year.

Among major cities, Wellington has dominated the growth with an annual rise of 10.2%. Lower quartile houses, which are usually sought by the landlords and first‐home buyers, increased 5.6% annually to $445,000 at the national level. In Wellington, this category rose to 14.1%.

At the national level, median rents for a three‐bedroom house are $450/week, increased from $440/week last year.


No chart with that title exists.



The rent or buy results for January 2020

In January 2019, it takes 26.5% of a typical households take‐home pay to service the mortgage and related household costs on a lower quartile priced house.

But it also takes 26.4% of household take‐home pay to make the median rent on a 3 bedroom house.

That means in January 2019, it takes 0.0% less of your household income to afford the mortgage than to rent. Of course, this assumes you have saved the deposit to afford a mortgage, and that may well be another big barrier for many.

It takes a typical household 3.6 years (with a saving rate of 20%) to save a 20% deposit, as now required by most banks.


Key drivers in January 2020

Rent affordability

The median weekly after tax income for a first‐home buyer household in New Zealand was $1,665.06 in January, up from $1,662.27 last month and up from $1,632.04 in January 2019. (A first‐home buyer household comprises one male and one female, both working full‐time. They are both aged between 25 and 29 years old and have no children)

Median rent for a 3 bedroom house in New Zealand was $440 per week, down from last month’s $445 and up from last year’s $430 per week. In January, it takes 26.4% of your after tax income as a first home buyer household to pay the median rent of a 3 bedroom house. This is down from last month’s
26.8% and up from last year’s 26.3%


Buying affordability

HLA measures of the percentage of after tax income needed to service the mortgage of a lower quartile house bought in January.

Factors that determine this figure includes house price, interest rate, income, rates, insurance and maintenance. In January, two years fixed mortgage rate of 3.46% and a lower‐quartile house price of $435,000 will require a weekly mortgage payment of $369.96. This is up from last month’s $356.46 and up from the $357.22 that was required the same month last year.

In addition to the mortgage payment, this analysis also includes the household costs of rates, insurance and maintenance, amounting to $70.62 per week. This is equivalent of 26.5% of the after‐tax income of a first buyer household income. This is up from last year’s 26.2%.


On a national basis it is clearly less expensive to stay renting than to buy. But apart for Auckland and Queenstown, buying is still a practical option for most.

The recent leveling off housing prices, even small falls in same markets, don’t really change the situation. But buying in anticipation of capital gains may not be wise any more. Housing may be returning to its primary purpose of ‘shelter’ rather than as an ‘investment’. And that may effect its positioning in retirement savings plan.

However, until the new Government’s strategy of supplying significant volumes of affordable housing, pressure will rise for rents. Limited supply and a refocus by landlords on ‘yield’ will be the main pressures. Competition for places by renters may get even more fierce. Rental affordability is the next area of housing stress. Having said that, there are fixed upper limits to what renters can pay. Sadly if may be the quality and standards of available rental options that suffer next.

Full regional reports are available here


Here is a cool tool that helps you assess a range of factors.

Now, the assumptions

We assume you are a first home buyer household, renting a 3 bedroom house and paying a median rent. Your household income consists of one male median income and one female median income from the 25-29 age group.

We assume you want to buy a similar house, but as you are starting out, it will be one priced in the first quartile. You have saved a deposit based on 20% of your household income for the past four years to a maximum of 20% of the house price. The resulting mortgage is for 25 years as a traditional table mortgage. In this report, the two-year fixed mortgage interest rate is used until August 2010. From September 2010 onward, this research has adopted a variable or floating interest rate as the market is shifted to a lower and cheaper rate on a floating basis.

Note to Editors

This work must be referred to as the rent-or-buy Report. It has been produced by Please direct queries via email to, or see our contact information below.

Sources / Definitions / Methodology

Targeted renter or buyer: An individual in the 25-29 year old age group that buys the lower-quartile priced house with a deposit as calculated below.

Interpreting this Index

These affordability indexes measure the proportion a weekly median rent for a 3 bedroom house and a weekly mortgage payment is of weekly take-home pay. A separate measure is generated for each region, plus a national one, and for other various mortgage interest rate terms.

Household Weekly Income

The source on which we base our estimates of weekly income, is now the LEEDS (Linked employer-employee data survey) data from Statistics New Zealand.

A household of one male and one female, both on full median incomes, is used.

Income tax rates from IRD are used to calculate a take-home pay (which is the LEEDS-based data net of the specific income tax rate).

Deposit - First home buyer index: 

As house prices vary by region to a larger extent than wages, we refrained from using a simple 10% deposit-90% mortgage rule to emulate a first home buyer. Instead, to capture the disparity between incomes and house prices we estimate the deposit as a function of savings – that is 20% of weekly income saved for 4 years, plus interest earned at a 90 day deposit interest rate.

Home Loan: (Lower quartile house price less the deposit)

Mortgage repayments are based on the value of the home loan, paid weekly for 25 years, using the 2 year bank average interest rate. The home loan is assumed to be a standard table mortgage, where both interest and principal is repaid in a fixed weekly payment made in arrears. The repayment is calculated using the tools on our Calculators section.

Mortgage Rates

Average mortgage interest rates are sourced from These averages are for banks only as banks have 90%+ of the mortgage market. Affordability calculations are done for mortgages at the floating rate and one year through to the five fixed-rate terms. In this report, the two-year fixed mortgage interest rate is used.  Until August 2010 this series used a 2 year fixed rate loan as the basis for interest rates. In September 2010 it was switched to the floating rate, reflecting actual market shifts by borrowers. In June 2014, it was switched back to the 2 year fixed rates, again reflecting market shifts.

House price data

Median house prices are as reported by the Real Estate Institute of New Zealand. Although the REINZ series is more volatile than the QV equivalent, there is a highly positive correlation between the two series. The REINZ series is more current and offers an earlier indication of market trends.

*In September 2013, REINZ advised that there were calculation errors in some first-quartile house prices supplied over the past twelve to eighteen months. We are now using the updated and corrected data. Earlier published results may not be accurate on this aspect.

Saving Rates

Average savings interest rates are sourced from These averages are for banks only, and use the 90 day term deposit rate. Saving calculations take into account the individuals marginal tax rates as defined by IRD.


This study uses data sourced from the Department of Building & Housing tenancy bond service, focusing on median rents for a 3 bedroom house.

Rates, Insurance and Maintenance

These are costs paid by a landlord and included in rent. To ensure this Rent-or-Buy analysis is fair, we have assumed the following costs will be incurred by homeowners:-

Rates and insurance – The average rates and insurance costs are sourced from the Household Economic Survey published by Statistics New Zealand.

Maintenance – Based the average weekly property maintenance related expenses as sourced from Statistics New Zealand.



No reader should rely on the contents of this report for making a specific investment or purchase decision. The information in this report is supplied strictly on the basis that only overall market trends are being reported on, and that all data, conclusions and opinions expressed are provisional and subject to revision.

If you are making a specific investment or purchase decision, you are strongly advised to seek independent advice from a qualified professional you trust.

The conditions and disclaimers set out in our Terms and Conditions are applicable to this report as well.

This report is made available on these terms only, and JDJL Limited or is not responsible for any actions taken on the basis of information in this report, or for any error in or omission from this report.


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All this discussion about the price of everything ( and the value of nothing ) leaves me cold.  I just spent my lifes earnings on a beautiful block of land where I will happily while away my time and play at being self sufficient as much as possible. I will happily be buried there under a tree, and if its worth a whole lot less when that time comes, I care not a fig. If it cost me 0.0024% more per acre  to buy it in March 2011 than It would have if I had invested the deposit and waited till 3rd quarter 2015 or something of the like, would I have been better off? Or should I have bought it in Waikikamukau where land is 3.72% cheaper than it was last year. Its not about how much you make over time, its about what you make of the time you have got.  


Murray I agree absolutely.  And here is an item which discusses the consumption value of owning your own home.  

The salient part:

  • Now for the usual caveat: Everything above discusses buying a house as an investment. Most people get more consumption value from owning a house than from renting an equivalent house because most people get utility from living in a place that they own. They like the security, the ability to make modifications to the house (even though most of those modifications are probably money-losers), and so on. Also, in many markets you just don’t have a choice. I live in a small college town, and the rental market here is primarily geared toward students, so it’s hard to find a nice house for rent (especially one that will let you have a dog, which we did when we moved here). So there are plenty of good reasons to buy a house other than the idea that it’s a good investment. Those are valid reasons why you might buy a house even while thinking that it’s a bad investment. Except for scale, it’s no different from, say, eating at a nice restaurant now and then. Buying an expensive dinner is a lousy investment, but it gives me consumption value.

(Emphasis added)


Kwak continues:

  • As Rappaport says,

“Homeownership, at least until recently, was often described as a great investment that also includes a place to live. More accurately, homeownership should have been described as a place to live that also includes an expected investment benefit.”

  • There is an expected benefit there, but remember that it’s not that big and it comes with greater financial risk.

In addition note Kwak says  

  • " as your expected holding period decreases, owning becomes less attractive because you have less time over which to amortize the transaction costs."

I would comment that the converse applies " as your holding period increases, owning becomes more attractive because you have more time to amortize the transaction costs." so if we moved less often we aould gain more.



I know this report is updated regularly.

However I still await reference to the "opportunity cost" of the saved deposit funds.

As I see it when you buy your house you not only have to pay out interest on a mortgage together with the other ongoing expenses. You have also given away income on the 20% deposit.

For example $80000 saved and earning 5% is $4000 annually before the tax so possibly $3000 net on average is also  given up.


There must be a new monthly report about now.

Please Bernard, can we address the "opportunity cost" on the deposit and come up with "real" figures?


Another 6 weeks gone by so I guess any answer on the opportunity cost of a deposit is either not relevant or "too hard"???


Hey guys, I'm not sure that the LEEDS dataset should be used for this doesn't include students, pensioners, beneficiaries etc...

After looking at the Statistics website, the NZIS would be a better dataset because it includes a wide range of sources. LEEDS just uses people in paid work, and in NZ we have about 300,000 people of working age on welfare - and they should really be included.

Below is a quote from the Statistics website:

"The NZIS includes “income for everyone over the age of 15 years and over, including those not in paid employment” (Statistics NZ, 2008a, p2).

This means that, unlike the Quarterly Employment Survey (QES), the Labour Cost Index (LCI) and the Linked Employer-Employee Dataset (LEED) job-level datasets, the NZIS includes people who are not engaged in paid employment (for example beneficiaries, superannuitants, stay at home parents and students) as well as those receiving both wages and salaries and other forms of income such as government transfers. As a consequence, the NZIS includes income from a greater number of sources, such as income from government transfers (for example benefits and tax credits) and investments as well as from wages and salaries and from self employment. (Statistics NZ, 2008a, p6)"



This buy v. rent cost of carry is not a fair comparison. Basel Brush III is correct. You have to give the deposit to both the renter and the buyer. The buyer is about $80,000 richer than the renter (as far as I can work out). A renter could use that deposit to "live free" for 4 years!


There may be significant nonmonetary benefits of home "ownership", but there are significant benefits to having the deposit rather than the financial claim on the house. These relative personal benefits can be evaluated by the individual, but there is the need for a fair comparison of current costs of renting v. buying for the graph to be useful


Diversification of wealth has never been easier, and a house means that you are 100% dependent on the local economy. This may work out, but it is an extreme bet. What about putting a bit of the deposit in Indian stocks and commodities and farmland and world fixed income which may pay off if the local economy tanks. (I would suggest putting the renter's deposit into a short-term term NZ bank deposit for the calculations in the graph).


The flexibility to change your asset allocation as conditions change is also a major benefit. (These benefits can be gained by selling the house but there are large transaction costs.)


Note: A little perspective, but it is only home ownership provided you pay your mortgage (the bank has a lien and owns your home unless you make the mortgage payments, and not making the payment results in the "default" state), 



The other problem is why use a cheap home to buy when you use the median home to rent? Again not apples to apples.

Here's a back of envelope calculation:

AKL Median 3-br home =500,000 (actual REINZ 513, 612).

$400,000 25-year mortgage, no fees, 5.74% floating from = $580/week

Rate, insurance and maintenance = $20/week ($1,000/year, LOW?)


BUY > $600/week


AKL median 3-br rent = $550/week ( graph)

Interest from deposit = 100,000 * 4.7% ( 2 yr bnz) /52 = $90/week


RENT > $460/week


Cost of carry advantage of renting at current prices = $140/week.

Buy to Rent = 1.30


Buy if the perceived benefits of owning are greater than $7,280/year


How about just using a "P/E" ratio = 513,612/(550*52) = 18 for Auckland 3-br house.

The article mentioned by Julienz ( says if the P/E is above 15 renters do better financially than owners.


Snippy you are so very correct - and it is this simple little formula that saw some wealthy people in Australia sell their private homes as renting their luxury homes was cheaper than owning.  When the formula changes they buy again. But most people just don't seem to get it and they don't allow for a worst case scenario (interest rates rising or a job loss etc) they just HOPE things will be OK.


Another worst case scenario is you have bought in an inflated market, and when the bubble bursts, you end up with negative equity in your properties.  The banks will chase you for more equity as protection, or you lose your houses and work for many more years to pay off the shortfall in loan that you can't pay back in full after the mortgagee sale.  It happened in HK during the Asian financial crisis in the 90s.  But personnally I feel safe and confident in Auckalnd properties.  



Let's face it.  Real estates always go up in value in stable and war free countries. When you put money in the banks as term deposit, you expect to earn an almost risk free return. The same happen to property investment, otherwise home owners will end up losing over long term taking into account of inflation, maintenance cost, mortgaging interest and etc.  


Such as Japan and USA?


In long term, yes


I had to build my own spreadsheet that reflected my actual choices recently when I had to move out of a rental and had the choice of buying or renting here in NZ.   In short for me renting remains a better option - but YMMV.    The model doesn't place a value judgement on the virtue or otherwise of renting vs buying. 

The question the model asks is not 'rent or buy' now - but by how much does house price inflation need to beat general inflation or other investments in order to be better than renting - over the lifetime of the mortgage. 

Such a model includes some of the key issues mentioned above.

1. The renter and the buyer both start with the same deposit money - e.g 80k. the buyer uses it as a deposit - it reduces his mortgage payments.  The renter uses it as a savings nest egg. 

2. They buy or rent the same house. - based on realistic rent to buy ratios for the area.  This is important because at a time when rents are effectively capped by people's ability to pay, house prices are capped by people's ability to borrow - i.e the price of credit.  Hence they rise when interest rates are low and are expected to remain low. 

It is not realistic to assume that renters are buying lower quartile houses or that they are first time buyers. 

3. The buyer has to cover the cost of ownership of the house - rates, insurance etc.  This can add a significant amount to the weekly rate.

4. Both buyer and renter spend the same amount each month.  i.e when rent is subtracted from mortgage and property costs the rest goes to the savings investment. 

5. Interest rates can go up or down, but savings pay a higher interest than loans.  so for example the renter is making 2% more on their savings than the buyer is paying in mortgage.  For the model what is more significant is the long term interest rate over say a 15 year mortgage than the current low interest rate.  I set the spread to be conservative to match the supposed security of housing investments.   For my example I set base rates at 4,6 and 8% .   Much higher interest rates obviously distort the model as they have the capacity to blow the buyer out of the game. 

6. At the end of the mortgage period the buyer obviously owns the house, while the renter has a stack of cash ( which which they could also buy a house outright, or live on for many years).  

7. We leave out issues of liquidity, mobility, moving costs etc. 

I am not an economist and I setup the table to reflect my own income (well above median)  and current rents and prices.  But the conclusion is that to buy I would need to find a house under 400k that is as good as the place I rent.  I would have to limit myself to a 10 year mortgage and would need to get 5% annual house price inflation to beat renting/saving.  

A more realistic local house - say 450 would take 15 years to pay off, so the house capital gain would need to be over 8%pa (every year for 15 years).  

The killer though is the effect of mortgage interest rates in the 8% range. They require house prices to rise by 20%pa.  (for 20 years).  - but we already know that high interest rates squash house values and can lead to falling prices.   

I'm sure there is lots wrong with the model - if anyone wants to take my assumptions and produce a better version I would be grateful.   For example what would be the effect of a period of higher inflation or deflation.

I've owned houses since I was 25 (now 50) and switched to renting 5 years ago.  So I know all about the other issues - like bad landlords, lack of tenure etc.  So I am not partisan on this issue.  But my summary of the current NZ situation (Especially Auckland) is this:  House prices are historically high both in comparison to rents and incomes.  Interest rates are historically low.  House prices may/could continue to rise due to a variety of factors but if you buy now you are paying a lot for the privilege - like buying apple stocks today.  This means you need prices to rise much, much more in the future in order to cover your loan,  you also need interest rates to stay historically low and you need enough secure income to stay in the game - if you are forced out (i.e. have to sell in a falling market) you could lose your entire stake.


Thats ok if you disagree with my assumptions - thats why no one model fits everyone and much of the chatter here is moot.   However I was interested to see that the NYtimes online model in a previous comment gave much the same results. 

But I'll comment on a few of your points:

Don't know many folks with 80k sitting in the bank.

- where does the deposit for a house come from then?   Borrowing over 80% of a mortgage significantly increases the cost of the loan?   

Most renters I know of don't have a stack of cash floating about after 5-20 years.

- I will agree with that - unless the renter agressively saves or invests the difference between the rent they pay and the mortgage and expenses they would pay if owning then they will not end up with an equivalent asset.  However the point here is to choose between investment assets - house or other fund. 

Your spending habits change considerably when you own vs when you rent.

- yes, you spend a lot more on the house.  But seriously I agree that a mortgage is a form of enforced saving for those unable to set up an AP into a long term savings account.

Many landlords wear a portion of the overheads.  

- Yes tenants usually do not pay property taxes, house insurance etc.  However this overhead gets amortized into the rent.  Rents may not represent the true cost of the house - thats the point of the discussion really - rents are a market. 

Interest rates do go up and down, and savings never pay more than loans - where would the banks margin be?

- I think I may have expressed myself badly there - at any point in time the cost of borrowing money (the mortgage rate) is high in comparison to the return on savings ( at least for normal people).  That is the banks margin.   


As you say - you have run residential properties for many years - that implies that there is a long term balance between people who are prepared to buy and those who want to rent.   I'm sure you would not claim that its always better to buy than rent - if this were the case there would be no market for rentals.  The question each of us needs to ask accurately is at what price point does the switch over occur or put more precisely how long would you need to own  a property for in order to do better than renting + other investment. 

I would go further and suggest that the property rental market needs to get away from the parochial idea that rentals are just for young people who can't afford to buy a house.  This leads to crap housing stock and bad landlords who don't regard the tenants as an asset.  Remember rental + tenant is the asset - not an empty rental. 



Blah blah blah. It's simple really. You rent a house, you buy a home


I'll continue to answer your points - although there is nothing to answer really, as I said my model is correct for the choice in question - in my current circumstances should I rent or buy. I get to choose the assumptions.  I'm not trying to persuade anyone of anything.

 but if you buy-to-own you're looking for a nice place, suited to your lifestyle (either lots of grounds eg kids, or almost none, yuppies/travelling breadwinners) and convenience needs

And as the other commenter says - you can't rent a home. 

You actually put your finger on a serious blind spot with landlords - why do you think that a renter wouldn't want _exactly_ the same set of features as someone buying a house.  I'm fifty, married, good job and assets and I want a nice place to live. I have enough for a deposit. But there is no house that fits my criteria in this area that makes any sort of financial sense.  

I seriously doubt that we will see 10 to 15 years of continued low interest rates.  (but thats a personal opinion). The rent to price ratio here is over 25  and price/income ratios near an all time high.  There is a non zero risk of interest rate rises and falling house prices as we have seen in many other OECD countries.   All in all it looks like a bad deal at the moment - one which may well get worse before it gets better.

Its _not_ a bad deal if your circumstances are (or were) different - especially if you already own the assets.  If you were living in NZ in 2003 and bought then (or sooner) you would indeed have done quite nicely.  Lots of people did that - which is why there are plenty of rentals around.  If you are a landlord who has already amortized a big bunch of borrowing costs, and leveraged into a second or third property etc then good on ya.   

Next you tell a bad news story about tenants.  I'm sure most landlords have such stories - so what price/value would you put on good tenants?  How much more would you value a 2 or 5 year tenancy agreement over the default 1 month?  Most long term tenants can tell similar war stories about landlords who never do repairs, who try sell the place while you are still living in it etc.  How do we set up a deal whereby I get a good landlord and house and you get a good tenant? 

If investors want nice wealthy middle class tenants who pay regularly, maintain the place nicely, grow gardens and trees etc. then they need to look more closely at the 'product' they are offering.  Genuine long term successful businesses focus on identifying customers need and meeting those needs.  The rental market in NZ is about as sophisticated a business as a car boot sale.  There are much better profits to be had for the 'Toyota' of property management companies.  

NZ appears to be stuck in a circle:

Rentals are for low income earners, So properties have to be cheap and turnover high, so they don't have basics like fences, good insulation and double glazing, let alone quality features like solar hot water,  so people have to buy to get a 'home' so they put all their resources (and leverage) into doing so depleting the rest of the NZ economy and leaving the rental market for those who cannot rather than would choose not to buy, and so it goes on. 

In many countries - especially those with good tenancy rights, many people choose to rent a nice house or apartment for much of their lifetime - and there is no stigma to renting.  This creates a market for well designed, good quality rentals, as well as a mature legal framework that supports the needs of both owners and occupiers.  Landlords who are businesses rather than a ma and pa who are using the house as a pension scheme are less emotionally involved with the property and can be objective about providing a good product and service for a good fee.   

Think of it this way - I can cut my own grass or outsource it to a gardener, I can own my own car - or outsource it to a taxi/public transport, I can get my kids privately educated or in the public schools.  In each case I can choose different ways to source the service I need taking into account my current circumstances and flexibility.  Where a good market exists the quality of service and the value of customers rises.  I happen to want to outsource my living accommodation.


Really enjoyed this comment. Would be nice to be able to rent good quality houses in New Zealand! I agree, there's so much social stigma against renting in this country.

I've written an article here about why you owning a home is not the be all and end all. It's called "Why you don't NEED to own a house in your 20's" Would love for you to check it out if you get a chance.


The price of materials for building is most likely going to increase in 2014 as demand increases.

As for the market generally, not enough is being built in Aucland.

So will prices drop?



Leaflet drop seeks homes for Asians

By Morgan Tait

5:30 AM Friday Dec 27, 2013 Agency launches major letterbox pitch to meet the demand of cash investors arriving for Chinese New Year


Photo / Thinkstock

A real estate agency that deals with Asian-based investors is scouring Auckland and the upper North Island for properties to keep up with the demand from potential buyers.

Property Asia Realty has begun a huge sales pitch with a letter-drop in all Auckland regions ahead of the Chinese New Year, when they expect an influx of Chinese visitors.

They are offering quick property sales at the best price, as cashed-up investors vie for a slice of the market.

Agent Jason Xiao told the Herald pamphlets had been dropped all over the city to catch the eyes of Kiwis hoping to sell.

"We have lots of Chinese clients who are on holiday and coming to New Zealand to look for a new investment."

Mr Xiao said he had four groups of Chinese clients in New Zealand at the moment and was expecting a further five to fly over during Chinese New Year at the end of January. "Sometimes they come with families or groups of friends who are all buying together."

The company has been operating since 2009, its website claiming more than 1200 clients worldwide. It lists residential, commercial and agricultural properties, as well as businesses, throughout Auckland and the upper North Island.

Uptake from vendors responding to the pamphlets varied, but business in general had been growing since the end of last year, said Mr Xiao.

"We can get the best price for the sellers and work fast because all the Chinese are cash buyers, they don't get finance. They just come and buy straight away and go.

"And we have a very good rate of return for investment; the strength of properties in New Zealand provides a very good return - better than China."

Real Estate Institute of New Zealand chief executive Helen O'Sullivan said that although she had not heard of the practice, it wasn't surprising agents were thinking of new ways to sell houses.

"It would be the first I have heard of it, targeting specifically towards a particular group of buyers," she said. "It's not unusual when stock is short, as it has been in Auckland for the last 12 to 18 months, for agencies to encourage people to list with them using leaflets and other forms of advertising."

It was becoming more common for agents to specialise in niche areas, she said.

"Quite often you will see a house sell on your street and a few days later get a pamphlet saying 'more buyers waiting', but I guess it's just another tactic to attract listings."

She said New Zealand was an attractive place to invest.

"New Zealand is a stable economy with some of the best growth prospects in the OECD so it's not surprising offshore investors are interested in the market."

The BNZ and Real Estate Institute survey in May showed overseas buyers accounted for 8 per cent of residential house sales in New Zealand.

Sixteen per cent were from Britain, 15 per cent from China, 14 per cent from Australia and 12 per cent from other Asian countries. Of those buyers, 3.6 per cent were not planning to move here.

Read more by Morgan Tait




You might be paying a lot more for mortgage, but in fact if you rent it for just say in 5 years, you most likely spent more than a half of the mortgage cost, so definitely owning it by mortgage is certainly better specially if you can now afford for that.

Rex @


Great article, definitely owning your own home is the best long term investment.


With prices decreasing, I wonder if it is time to change, "But with capital gains accelerating, and that trend building into areas out of Auckland and Christchurch, you might also think about whether you can save fast enough to keep up with the price rises. You will need to have a view about the likely track of house price gains."


Imputed rental value of owner occupied housing (net of mortgage interest and some expenses) should be taxed as income. This was the case in the UK until the 1960's/70's, and in various forms in many other countries. It's explained on the internet - just Google it. No great mystery. The NZ policy makers are undoubtedly quite aware of it but choose to overlook it because it is politically very contentious. Clearly, failure to tax it amounts to subsidy to owner occupiers effectively capitalised into higher house prices. It is inequitable that rent payers effectively do pay tax at income tax rates on the rental value of the property they occupy (they have to find a gross amount of income and pay tax on that before having a net amount of income with which to pay rent). Until the 1980's the scale of subsidies tended to be received by a significant proportion of rent payers (i.e. various kinds of government social transfer payments received by beneficiaries) tended to complicate the inequality equation. But those subsidies have since greatly reduced - thus greatly reducing that complication. Introduction would broaden the tax base, remove a subsidy capitalised into higher house prices and remove a gross inequity. Introduction could be "neutral" on total tax take - through reductions in direct taxes - e.g. in GST.