Looking To Buy Your First Investment Property? Here’s How To Get Started.

If you’re considering taking your first step into property investment, 2025 presents a unique opportunity that shouldn’t be overlooked. In this article, we’ll check out why the New Zealand property market is ripe for investment and how you can navigate this exciting journey.

Why Invest in Property Now?

1. Market Recovery and Growth Potential

The New Zealand property market is showing signs of recovery after a difficult period. CoreLogic’s latest Home Value Index (HVI) reports that property values decreased by only 0.1% in January 2025. This small change has been consistent for five months, suggesting the market may be stabilising. The national median property value is now $803,819. While this is 17.5% lower than the peak prices seen in late 2021 and early 2022, it’s important to note that it’s still 16.3% higher than pre-COVID levels in March 2020. This information indicates that despite recent ups and downs, the market has grown over the long term.

2. Favourable Economic Conditions

The Reserve Bank of New Zealand has been proactive in stimulating economic growth. With interest rates on the decline, borrowing costs for property investors are becoming more attractive. This creates a prime environment for those looking to finance their first investment property.

3. Rental Market Strength

With housing shortages persisting in major cities, the rental market remains robust. This ensures a steady stream of potential tenants for your investment property, reducing vacancy risks and potentially providing strong rental yields.

Navigating Recent Laws and Regulations

So far things are definitely looking up for property investors. However there are some important changes to property investment regulations that have happened recently, so we will touch on them here: 

1. Tax Deductibility Changes

From 1 April 2025, property investors will be able to claim 100% of the interest incurred on loans for residential rental properties as a tax deduction. This marks the end of the phased approach to reintroducing interest deductibility. The repeal of these rules is expected to significantly improve cash flow for many property investors, as they will be able to offset their full interest costs against rental income when calculating their tax obligations. 

2. Bright-line Test

The bright-line test, which determines tax on property sales, has undergone substantial changes, simplifying the rules and potentially reducing tax liability for property investors.

From 1 July 2024, the bright-line period was reduced to 2 years for all residential properties, regardless of when they were purchased. This means any residential property sold within two years of its purchase date will be subject to tax on any profit made from the sale, unless an exclusion applies. These changes offer more flexibility for property investors and could potentially increase returns on investment by reducing the holding period required to avoid bright-line taxation.

3. Healthy Homes Standards

By July 1, 2025, all private rental properties must comply with the Healthy Homes Standards, regardless of when the tenancy began. These standards were introduced to ensure rental properties are warm, dry, and safe for tenants. The Healthy Homes Standards are a crucial aspect of property investment that landlords need to be well-versed in, so it’s worth checking out the requirements here before you purchase a property as a rental. The Healthy Homes Standards represent a significant shift in the New Zealand rental market. While they present challenges, they also offer opportunities for property investors to improve their assets and potentially increase returns. 

Six Steps to Buying Your First Investment Property

1. Assess Your Financial Position: Before diving in, take a thorough look at your finances. Consider your income, existing debts, and savings. As a mortgage adviser, I can’t stress enough the importance of having a solid financial foundation when venturing into the world of property investment.
   

1. Set Clear Investment Goals: Are you looking for long-term capital growth or immediate rental income? Your goals will guide your property selection and investment strategy.
   

1. Research Target Areas: Look for areas with strong growth potential. Cities like Christchurch, with a median property price of $765,011 and steady growth, offer attractive opportunities for first-time investors.
   

1. Understand Financing Options: Working closely with a mortgage adviser will open up a range of different mortgage products available. As interest rates decline, now is an excellent time to lock in some favourable terms to help with your cash flow.
   

1. Build Your Team: Surround yourself with a solid team of professionals. A good mortgage adviser, real estate agent, property manager, and accountant can be invaluable allies in your investment journey. We can put you in touch with the right people.
   
2. Plan for the Long-Term: Property investment is a long-term game. Consider future market trends, potential area developments, and your own life plans when making your decision.
   

Your Next Steps

CoreLogic’s chief property economist, Kelvin Davidson, notes that while any turning point for house prices won’t be sudden or strong, the current conditions present good opportunities for finance-approved buyers. This underscores the importance of being well-prepared and informed as you enter the market. So feel free to reach out to discuss your investment goals and let's create a strategy tailored to your success!