[Moorf]

I thought I'd see if anyone here has any advice/experience re whether buying land a year or two ahead of arrival in NZ would be a good use of funds?

Friends in the UK, who plan to be here in around 2 yrs time, are pondering purchasing some land - a maximum of 2 acres in a lifestyle block area in Canterbury - for around $170-200K. I couldn't advise them, and they will of course take professional advice, but do you think buying land is a good investment - i.e. better than in a bank in the UK?

I assume you'd need to pay to have it mown and managed over the years? At what cost? And can you actually purchase a section and leave it empty for a long period of time - i.e does this vary?

[willsken]

We did that. We bought 2 seperate acre plots when we came out on holiday 2years ago. They have gone up in value and earned more for us than if the money was in a bank. A lot of farmers are always looking for extra grazing and will normally be happy to put livestock onto it, no mowing needed!

I am pretty sure that unless there is a covenant on it saying otherwise you can leave it empty for as long as you like. We don't intend doing anything with ours for years.

[Moorf]

Cheers Nic - great news on your investment success :nice1

I think the prob with the sections they are looking at, is that they are in sectioned 5 and 2 acre sites, so they are blocks of rural land being divvied up - so I didn't really think it would be somewhere a farmer would graze any stock.

For instance - the sort of thing they are looking at is as per "Selwyn Surrounds" on the following link: http://www.bayleys.co.nz/search/property.aspx?MAXPRICE=200000&MINPRICE=0&ar=0&go2.y=1&pc=10&pt=0&rg=144&st=1

[Pip]

Hi,

having watched the price of land for a few weeks and versus the UK, I wished that we had bought some land a couple of yrs ago :laugh , but if I was in their position and had the funds to do that, I definitely would. In Ohoka, so many sections are being sold right now, that there can't be too much left to sell off and that will surely go at a premium.

btw - if not stock.. how about horses ?. 2 out of our 3.5 acres is made up of a paddock which is currently used for horses, and we are probably going to rent/let someone use it for horses for the timebeing to save us having to work out what to do with it just yet... As long as it was properly fenced and had a water trough.. or even the odd Alpaca..

Just a thought...!

[jaycee]

Moorf, do your friends intend to eventually build a home for themselves on the land, or is it simply an investment?

Either way, if it were me, I'd want to know about the area, either as a place to live or the potential future demand for land there. I believe the general opinion is that property investment will outperform bank interest, but sometimes only over a longer period. 2 years, as an investment, may not be long enough, unless you're lucky or can take a very well educated guess at how prices in the area will change. That's one of the skills of property investment of course, and I'm not an expert in that area, though I believe there are a few people on here who are??

I bought my house here four years ago and have made an estimated 45% in that time, but it goes without saying that the local property market and current financial climate will affect your friends' investment. I could have received the same return from property in the UK - but the problem is that the equivalent amount wouldn't buy anything in the UK!

I agree that leaving the section empty should be no problem. There are sections where I live which still have not been built on many years later - possibly because people have bought them as an investment and are biding their time. Although mowing isn't applicable here (the empty land is covered in native bush) I don't think maintenance of any kind ever happens!

If it is an investment purchase, I guess your friends could run into NZ tax issues when they sell up.

[eternalkiwi]

Depending on the area, farmers may be interested in small blocks of land as a source of feed or also as a holding pen/transit point for cattle.

I know of some people who have lifestyle blocks who lease land to farmers but I would say this does depend on who lives in the area and if any farmers with large land holdings are located within 1-2 kms.

Shawn

[sizzlingbadger]

My in laws have just completed on their land in Featherston, taken just over a year to get it sorted :roll But if they were to sell now they'd nearly double their money.

If you buy land in the right place you can make a killing on it. I don't know whether the sub division sections would be a good place to invest though. Quite a few we've seen are pretty bland and haven't sold as fast, those people that have bought and built are already selling on, to make money on the build process.

[Super_BQ]

In many of my past posts, I have a strong resentment in buying real estate for the pure purpose of investment / profiteering.

While for almost every person living in NZ, the consensus is that buying land means making big bucks. Hindsight is 20/20 and most tend to forget what the rapid rise in housing prices has done to the economy and it's impact on future generations. Specifically, in this game of buying and selling of land and houses in NZ, we get the rich get richer and the poor get, well extremely poor.

No one mentions about the lower income families that need to have a roof over their head. Instead, another wealthy immigrant comes to NZ and buys 3 or 4 properties for the "investment gain". Actually, all that I see in the NZ housing market is a huge displacement between the haves and the have nots.

The point I bring is that unlike any widely trade commodity (oil, coffee, sugar, corn, & 1000 more found on the futures exchange), houses should not be treated as a 'pawn' for all levels of class from the very rich to the very poor. As we all can see, every person or familiy needs a roof over their head and when you make real estate like the commodity of oil or the share price of a major company, you'll find that it's only the less wealthy that suffers and the rich that benefits.

I'm all for any proposal of capital gains tax on NZ real estate (with the exception of the sole principal house & land). Raising the reserve bank interest .25% at a time does nothing to stop the inflation. But a tax to discourage profiteering of this basic need will definitely make such investors think twice about buying real estate.

[Moorf]

Strangely, I know more Kiwi's who own lots of patches of land than I do immigrants!

I hadn't, however, realised how many on the forum had invested.. wisely it seems.. which is encouraging.

Not sure what you're trying to say about those that can afford to buy up some land while it's still affordable, and yes, hoping to make a quick buck. Greedy? Perhaps. Priviledged? Maybe - although not everyone investing has money to throw around, hence taking advice, but mostly what people want to do is put what they have somewhere it will do best..bank/property/oil/bananas..... pensions aren't gonna be great in a few decades...

I would also throw in to the mix that round here, in rural Canterbury, it's the landowners (Kiwi landowners) sectioning off their land (see Kirwee, Darfield and now Springfield and Sheffield) and profiting from us immigrants who are investing.

A neighbour has just sold off two houses, 2 sections and moved to his house that he previously rented out on Memorial Ave - he's very happy with the Pom who bought his land.

[incredible hulse]

It's a myth that immigrants are forcing the prices up by buying up the land. Whilst a small amount are coming in and doing that the overriding majority of the money coming in is from kiwi's returning from lucrative OE's spent IT contracting and similar making lots of money with the help of tax evasive umbrella companies. So indirectly it is the Poms paying for it I guess

[willsken]

No one mentions about the lower income families that need to have a roof over their head. Instead, another wealthy immigrant comes to NZ and buys 3 or 4 properties for the "investment gain". Actually, all that I see in the NZ housing market is a huge displacement between the haves and the have nots.

The point I bring is that unlike any widely trade commodity (oil, coffee, sugar, corn, & 1000 more found on the futures exchange), houses should not be treated as a 'pawn' for all levels of class from the very rich to the very poor. As we all can see, every person or familiy needs a roof over their head and when you make real estate like the commodity of oil or the share price of a major company, you'll find that it's only the less wealthy that suffers and the rich that benefits.


We have rental properties in the UK and intend to have them here as well. We are not rich and most likely never will be. I want to retire and live comfortably, not rich, just comfortable. I need to invest in something and the least risky way for me to do this is to buy property/land. I agree with the sentiments of your post but I feel that the statement of only the rich benefiting does not hold true. I also want to say that buying a house is not a necessity in life and people who don't buy, rent. Personally I don't see what's wrong with this as long as you have a home to live in.

[sizzlingbadger]

I know of a number of kiwis in Featherston that own a lot of the houses and land. Many use them as investment properties.

There's very few of us immigrants that are buying up property or land. My in laws actually bought the land for them to build a house and live there 6 months of the year. They're not selling the land but are glad that if they did need to sell they would see a profit.

For Featherston it's not just the rise in immigrants coming in. We're seeing a lot of people move over from Wellington to the Wairarapa because they can't afford a house there (us included if we wanted to move back), have a look at Debbie's posting on houses prices in Wellington.

It also seems right across the country that people are moving further and further out of the city centres because they can't afford to live there. I feel as much for the first home buyers as they simply can't afford to live in a decent area. We've seen here prices have risen nearly $100k in a year and they're still increasing.

If people who are looking to move here in a year or two want to buy some land now then I'd say go ahead you never know the market could go incredibly stupid like the UK market and they along with everyone else would be priced out.

Goes to get a hard hat :D :exit

[Super_BQ]

Good response. However no one has address the problem that current and future generations will never have the same lifestyle and ownership of land/houses than their previous generation(s) do. Go back 20 or 30 years ago and society ran perfectly fine with a single income. The husband brought in the $ while the wife stayed home to take care of the kids. Since then, the trend has turned to DINKS (Dual Income with No Kids) for the lifestyle and comfort that their parents or grandparents enjoyed at the same age.

Is this situation healthy? You tell me.

Strangely, I know more Kiwi's who own lots of patches of land than I do immigrants!

It's who you chum with. All the immigrants and newly returning residents have the same philosophy. The more land you own, the better - no matter how high the interest rate is at the bank. Show me an asian immigrant that begs to differ? The way I see it, local kiwis are only contributing to the problem by competing and with simply supply & demand economics, the locals have set the example to add fuel to the fire (higher housing prices).

Greedy? Perhaps. Priviledged? Maybe - although not everyone investing has money to throw around, hence taking advice, but mostly what people want to do is put what they have somewhere it will do best..bank/property/oil/bananas..... pensions aren't gonna be great in a few
decades...

Does borrowing 90% of the principal loan called investing? For the average wage for the average house price in NZ, why does it take over 70% of the average income to service the mortgage? The trend we're seeing is of the top 10% of the wealthiest land owners in NZ are depriving over 50% of those in the low income bracket in trying to get a mortgage for their 1st home. Perhaps the figure may be as high as 80% as we don't see this class living in the city.

Gov't pensions are a waste of time. Each individual should look at their own retirement plan / superannuation. The NZ consensus belief is that real estate does return more with lower risk than in any other vehicle. But i've only seen data that is contrary to this belief. For eg. A $6000 investment in 1990 for 1 share in BRKA (http://finance.yahoo.com/q/bc?s=BRK-A&t=my) is worth today nearly $110,000. If a typical house in 1990 was $50,000, then it should be worth $916,666 today (and we havn't factored the cost of rates, house maintenance, tax benefits, and the wow factor to show off to your friends that you own THAT house each time you drive by it).

So indirectly it is the Poms paying for it I guess

Does the seller of the house care if the buyer is a newly immigrant or a returning resident? Eitherway it's foreign funds coming into the country and the local Kiwis (that earn income in NZ) will try to compete for the sale.

I agree with the sentiments of your post but I feel that the statement of only the rich benefiting does not hold true. I also want to say that buying a house is not a necessity in life and people who don't buy, rent. Personally I don't see what's wrong with this as long as you have a home to live in.

I'm sorry, i'll clarify. As I mentioned above, it's the top 10% of the land tycoons that are creaming the crop. You as a mortgager using your salary income to pay off the loan will certainly make the (Australian?) banks rich. Perhaps you can step down from a landlord to becoming a tenant? I'd be a fool to believe that people aren't buying their 2nd or 3rd house for any other purposes than to make a gain.

It also seems right across the country that people are moving further and further out of the city centres because they can't afford to live there. I feel as much for the first home buyers as they simply can't afford to live in a decent area. We've seen here prices have risen nearly $100k in a year and they're still increasing.

If people who are looking to move here in a year or two want to buy some land now then I'd say go ahead you never know the market could go incredibly stupid like the UK market and they along with everyone else would be priced out

So who's pushing the price of houses in NZ? The gov't hasn't done a good job in controlling inflation and home affordability. Kiwi Saver scheme is a joke for the 1st time home owners option. If the gov't was serious, the capital gains tax aimed at real estate investments would certainly help. Even more so to discourage profiteering. The average Kiwi moves house less than 6 years, is this healthy for the family or healthy for their back pocket?

[Super_BQ]

I forgot to add that there's a growing trend for parents helping out their next generation in buying their home(s). Though the house value may be very high, the overal mortgage is cut down due to hand outs from their parents. A practice I rarely see done among my friend back in Canada.

Of course NZ has a tax free gift limitation of $27,000 a year. So the schemes I see is that they have on paper a loan of some larger amount, and over the years, the parents will successfully gift the loan portion away to their son or daughter. Those already gifting into a trust need not apply as they've already allocated their maximum gift limit a year (unless they want to contribute more taxes).

The end result, it's not really the new home buyers competing but indirectly, it's also their parents that are contributing to the battle of the real estates.

[willsken]

I'm sorry, i'll clarify. As I mentioned above, it's the top 10% of the land tycoons that are creaming the crop. You as a mortgager using your salary income to pay off the loan will certainly make the (Australian?) banks rich. Perhaps you can step down from a landlord to becoming a tenant? I'd be a fool to believe that people aren't buying their 2nd or 3rd house for any other purposes than to make a gain.



Super_BQ I don't claim not to make any gain and I don't apologise for making one. We are doing what we need to do in order to have a happy and secure retirement. What I did say is that we are not, nor will we become rich from it. Also I will never rent a house, I have no intention of paying someone else’s mortgage for them. There are many people out there who don't want to own their own home, they want to rent so it stands to reason they need to rent from someone. I also don't use my salary to pay these mortgages, the rent covers them.

When I read your original post I had a little though pop into my mind. I could see OH and I at home when we were 75 with blankets over our knees. Me saying to him "no you can't turn the heat up, we can't afford it. But never mind dear, just think how we changed the world by not owning more than one house when we were younger. Makes all the hardship of retirement worthwhile!!";)

[zardell]

Super_BQ I don't claim not to make any gain and I don't apologise for making one. We are doing what we need to do in order to have a happy and secure retirement.



Seems reasonable to me.........why else would you do it ??

The top 10% of the land tycoons or the fortunate few who go to work just because they enjoy it and not because they need the money are certainly not in my circle of friends.

Julie (just trying to make a buck !)

xx

[xanctus]

Quick question, if you would buy a land...can you finance it? or has it to be cash? Someone told me once, if you want to buy a land, you have to cash it. But if you buy a house then you can finance it.
Anyone can tell me this??? it's rather interesting to know about that fact.

[Super_BQ]

Quick question, if you would buy a land...can you finance it? or has it to be cash? Someone told me once, if you want to buy a land, you have to cash it. But if you buy a house then you can finance it.

You can finance anything. Even 2nd hard cars in NZ can be financed (which seems silly). Note that in NZ law, neither the house nor the land where the house sits on are inseparable. Anotherwords you can't say on 1 hand, i'll pay the land value by cash and mortgage only the house portion, then one day later on you try to sell only the land to a different owner while you keep living in the house.

[sarahw]

You can finance anything. Even 2nd hard cars in NZ can be financed (which seems silly).

Sorry not that I have a car on finance but you can finance 2nd hand cars pretty much anywhere in the world (I don't know where you come from because you haven't put that on your details - although I think I remember you mentioning Canada before - they also finance 2nd hand cars in Canada!) - New Zealand isn't particularly different from anywhere else. Why is it silly?? Just the same as financing a new car/boat/electronic item - its a depreciating asset & the maths behind it is the same (I used to work in finance & leasing) - the finance companies make quite a nice amount of money from it & people who would not normally be able to afford to buy a car or other item because they don't have a big wadge of cash can do so. Or are you suggesting that people who don't have the money to pay cash for something shouldn't have it? Some second-hand cars can cost anywhere from $5,000 up to $70,000 - that's not the kind of cash a lot of people have just hanging around!

[zardell]

Note that in NZ law, neither the house nor the land where the house sits on are inseparable. Anotherwords you can't say on 1 hand, i'll pay the land value by cash and mortgage only the house portion, then one day later on you try to sell only the land to a different owner while you keep living in the house.


And exactly why would you wish to do that, even if you could ??

Whats the point in leasehold or cross lease when you own freehold??

Both leasehold and cross lease properties are available for purchase should that be the route one chooses.

Utter twaddle.


Julie

xx

[zardell]

Quick question, if you would buy a land...can you finance it? .



Quick answer - yes.

Julie

xx

[willsken]

You can finance anything. Even 2nd hard cars in NZ can be financed (which seems silly).

When I read statements like this I often wonder if they are said just to wind people up. In the real world there are few people that have thousands of dollars sat around in the bank. Most people live month to month just managing to pay the bills. Are you saying that in this situation if they need their car to get to work and it needs replacing then they shouldn't be silly and borrow money so they carry on working? Nope, has a wind up. :roll

[xanctus]

Oh thank's for the replies, this is good to know...

[eternalkiwi]

If you buy land with a Mortgage you are likely to need a larger deposit (e.g 30%) compared to 0-20% for a house.

Shawn

[Super_BQ]

Sorry not that I have a car on finance but you can finance 2nd hand cars pretty much anywhere in the world (I don't know where you come from because you haven't put that on your details - although I think I remember you mentioning Canada before...

Uhm. I think I hit a soft spot about financing cars. I'm dearly sorry if I did. The reply was aimed from both extremes; mortgaging an investment (real estate) to borrowing funds for a car (a depreciating asset). I was speaking from an overall point of view.

Unlike every other developed nation in the world, NZ has the cheapest 2nd hard cars period. While 2nd hand Japanese cars sell for a good premium in the US & Canada, the same model cars of the same year in NZ could be sold for half (factoring exchange rates). But does that mean people in NZ should never finance such cars? Certainly not. Though the point I bring is that cars in NZ are no longer treated as an expensive commodity like they are in many other countries (ie UK). No more than ever, people can outright put down $2K or $3k cash (at Turners Auction?) for a cheap car where in another country, the only option would be is to finance (due to the much higher dollar value). Would it still be silly to finance? Definitely not for most families - i'm sure Turners Auction would say the majority of their car sold are financed...

Look up on some stats for % of car ownership per head of population. Because of the benefits of ACC, I don't know of other country that freely shows how affordable it is to own multiple cars.

As of interest, gone are the days when New Zealanders were required to have 'overseas funds' in order to buy their new car. Woud you believe during that time (pre 1986), a newly imported car would be sold for a lot more than what the original importer paid for (by as much as 20% was quite common). Because the country's currency was on a fixed rate and money moving in and out was controlled, it was rather difficult for locals to have their own car. Also those who did manage to own cars, there was a tendancy that they were well maintain and treasured (with the intention that cars had to last almost indefinitely). Nowadays, cars have become so inexpensive that owners easily dispose of them like toilet paper :laugh Well not quite like toilet paper...

[sunnyb]

It sounds as though it is really easy in NZ to buy a lovely large plot and build a house. Is it really that easy? We're hoping to move to somewhere outside Christchurch, rural, but not too far from work and school. Our ideal would be to buy 50 acres ish (including woodland if possible) and divide it between 3 families, building our own houses.

If this were possible, it would be all our dreams come true, but surely it can't be that easy ..... or is it ?????

Here's hoping
B

[incredible hulse]

It sounds as though it is really easy in NZ to buy a lovely large plot and build a house. Is it really that easy? We're hoping to move to somewhere outside Christchurch, rural, but not too far from work and school. Our ideal would be to buy 50 acres ish (including woodland if possible) and divide it between 3 families, building our own houses.

If this were possible, it would be all our dreams come true, but surely it can't be that easy ..... or is it ?????

Here's hoping
B
Land is getting harder to find but is still out there. Don't know Christchurch area specifically but would guess 50 acres would be difficult to get but not impossible. Problem is it is getting very expensive and would have thought that size of decent land would be well into the millions

[hball]

Other issue may be building three houses on one title. There are all sorts of rules and regs - check the District Plan for the area you are looking at - for example you may be allowed to build multiple dwellings if the local authority allows for 'workers dwellings' on the property. I think you may even have to prove there is no other alternative acommodation close by.
(Last dealt with this sort of idea some four years ago and it went finally into the too hard basket!!!)

[Pip]

It sounds as though it is really easy in NZ to buy a lovely large plot and build a house. Is it really that easy? We're hoping to move to somewhere outside Christchurch, rural, but not too far from work and school. Our ideal would be to buy 50 acres ish (including woodland if possible) and divide it between 3 families, building our own houses.

If this were possible, it would be all our dreams come true, but surely it can't be that easy ..... or is it ?????

Here's hoping
B


Well.. in todays Press, in the property section, I can offer you 109 acres (44 hectares) including four acres of pine trees for $685,000 + GST in Oxford which is about 45 mins from Christchurch. There is already one house on it which is included.. no idea what you'd need to go through to build a couple more or how much.. but maybe its a starting point! Alternatively Loburn (similar distance) offers about 30 acres including 4 bed house for $760,000.

Obviously the closer in you get to c.church, the more expensive it will get, but from the look of it, there are plenty of sections along the size you are looking for. Good luck!

[sunnyb]

[QUOTE=Pip;132692]Well.. in todays Press, in the property section, I can offer you 109 acres (44 hectares) including four acres of pine trees for $685,000 + GST in Oxford which is about 45 mins from Christchurch. There is already one house on it which is included.QUOTE]

Wow, that's the same price as an estate house with a handkerchief garden here !!!!

New Zealand, here we come ! :raebanana
B

[Shones]

Does anyone have any experience of buying land in the Christchurch area then building on it? We're hoping to look at some small plots while we're there in August and wanted to look up some good builders who build executive style homes. Any recommendations on reliable, good quality builders in the area?

Looking forward to your comments! Shona

[steviec]

Not an expert but sections in christchurch area range from $190k to $400+.
500m2 to 1500m2. All shapes an sizes and varying prices depending on which suburb. The farther out you go the more you will get for your money.
New developments building now, 4 bed, 2 bath, double garage etc $375 - $399k.
Developers/ builders are charging around $1000/m2. So if the house you want has a floor plan of 220m2, the build cost will be around $220k. Normally doesn't include landscaping.

[steviec]

With reference to some earlier posts.
Are non- residents allowed to buy lifestyle plots. Wasn't there a stink in The Press a few weeks ago about a millionaire (scottish) who bought an estate with promises to improve it and has done nothing to it.
Was that to avoid GST or am I just confused!

[Super_BQ]

Any person overseas can buy land in NZ. From IRD's point of view, it has nothing to do with tax at the NZ end. That is, a non-resident doesn't have it's tax liability in NZ. However, if you're resident in many OECD nations like UK, Canada, USA, the capital gain on the property in NZ will be subject to taxes as taxation is based on a "world wide basis" if you're resident in those countries.

From a Canadian perspective, if a resident Canadian buys property in NZ, they would have to pay tax on that property from the time they 1st bought it to the time they 1st moved in it. This was my arguement in another thread about NZ's 4 year tax exemption status. It provides little benefit as the tax liability will still be born at the other country.

Unlike in NZ, you can't simply sell off your primary residence home and move into the 2nd property you had for years, then later selling it for a tax free gain. The CRA would expect capital gains tax from the time the 2nd home was purchased to the time you moved in it. The reason being that you've already had the tax free gain on the principal residence, why expect to double or triple dip on the 2nd or 3rd piece of property? The less fortunate already have a tough time trying to buy their 1st home when the wealthy can get all these benefits?

BQ