Introduction
The New Zealand property market is a dynamic space, shaped by ever-changing regulations and economic policies that impact developers, investors, and homebuyers alike. Government policies and regulations provide opportunities and challenges, particularly around new builds, the tax incentives and financing rules around them. This blog explores those policies, offering insights for developers and buyers in 2025.
The New Build Advantage
New build developments remain NZ’s core strategy to address the housing shortage, with polices designed to incentivise construction and investment. These incentives create advantages for both sides of the deal.
On one side of the equation, you have the buyers who benefit from new builds, as financing for the purchase of these has been made more accessible due to the RBNZ’s LVR exemptions. As of 1 July 2024, new builds, defined as properties purchased within six months of CCC issuance, are exempt from high LVR restrictions. This allows investors to lend up to 90% of the property’s value, which contrasts sharply with the 70% LVR cap investors face on existing homes. This policy makes new builds particularly attractive for first-home buyers and investors who are looking to enter the property market with smaller deposits.
On the other hand, developers also benefit substantially when selling properties within six months of receiving CCC. The RBNZ's LVR exemption for new builds acts as a powerful sales accelerant. By making it more affordable for a wider pool of buyers (particularly investors) to secure financing, developers can experience increased demand and faster sales cycles. This rapid sell-down of stock is critical for developers, and frankly, if you're not capitalising on this window, you could be leaving significant money on the table.
Improved Cash Flow: Time is money for developers. Quicker sales mean a faster return on their investment, freeing up capital for new projects and reducing the need for prolonged, expensive debt financing on completed developments.
Reduced Holding Costs: Every month a property remains unsold, it incurs holding costs. We're talking about interest on your bridging loans, rates, insurance, and the ongoing maintenance. Rapid sales significantly slash these overheads, directly improving your project's profitability.
Improved Project Viability and Future Funding: A strong track record of successful and timely sell-downs demonstrates clear project viability to lenders and investors. This isn't just about the current project but makes it significantly easier to secure funding for future developments, often at much more favourable terms.
In essence, the LVR exemption creates a cycle that stimulates buyer demand by making new builds more attainable, which in turn provides developers with the financial momentum and market confidence to continue building.
Scott Muirson from SM Property runs a real estate agency dedicated to selling new build townhouses across New Zealand’s main centres. As both an active investor with over seven new build properties in his portfolio and a professional who has helped more than 500 clients into their first homes and investments, Scott has seen first-hand the advantages new builds offer for those entering the property investment market.
"At SM Property, we often talk to developers about “the 10% mistake”, the costly decision to hold out for higher prices post-CCC, only to hit the six-month expiry on LVR exemptions. Once a development slips past that window, demand from both investors and first-home buyers can fall sharply, and we’ve seen plenty of examples where a delay ends up costing 10% or more off achievable sale prices, which could have been just 2-5% lower.
The best de-risking strategy for a project is momentum. If you’re not seeing a consistent enquiry and offers on the table (depending on the stage and market), something needs to shift, whether that’s price, terms, or marketing. Once the build is complete, price & marketing are usually the only levers left. By contrast, selling off-the-plan gives you more flexibility to tweak layouts or incentives while keeping your price expectations firmer.
Ultimately, a smaller margin now can be far better than no margin later. The LVR exemption creates a window of opportunity, but only for those who move quickly enough to take advantage of it."
Key Considerations for Developers
For developers to capitalise on these policies, they must make the following considerations around sales strategies, entity structuring, and financing partnerships.
Timely Sales Strategies: As established, the six-month post-CCC window is critical. Developers should prioritise efficient project completion and marketing to meet this deadline. A key challenge in the current market is the significant amount of residual stock. With forecasts suggesting house prices could begin to increase over the next 6-12 months, many are tempted to hold these properties, seeking finance to delay sales until prices recover. This strategy can be risky! Holding a property past the six-month deadline causes it to lose the “new build” status for buyers, thereby eliminating the financing benefits.
This loss can significantly impact the property's marketability and final sale price, as it disqualifies purchasers from accessing the favourable low-deposit loans that make new builds so attractive. Developers must weigh the potential gains of waiting against the risk of diminishing buyer demand by letting these valuable advantages expire.
Entity Structuring Caution: Maintaining consistent entity ownership is essential to preserve the new build advantages. Transferring a property to a new entity can disqualify it from its new build status, subjecting it to standard LVR restrictions (80% for O/O & 70% for investors).
Hopefully, the above list has helped. As always, if you have any projects coming up and you want to talk through them, please reach out!