49% of Kiwi Property Buyers Are Relying on Gut Feel. Here's Why That's a Problem

Buying a property is the single largest financial decision most New Zealanders will ever make. It concentrates a significant portion of lifetime wealth into one asset, in one location, on one piece of land.

The stakes could not be higher.

Striking new research (see here) has found that nearly half of all Kiwi property buyers - 49% - admit to relying on intuition rather than independent data or professional reports when making their decision.

That figure comes from research commissioned by Suncorp, one of New Zealand's largest insurers, and it points to a gap that the property industry has been slow to address.

The information problem for property buyers

The same research found that more than four in ten property purchases happen without the buyer properly considering the natural hazard risks attached to the property. Only 57% of buyers considered natural hazard information at all when purchasing their most recent home.

This matters more than it used to. The insurance market in New Zealand is changing rapidly. Dwelling insurance costs have risen 123% since 2016 - more than three times the rate of wage growth over the same period.

Global reinsurers are scrutinising New Zealand's exposure to natural hazard risk, and that scrutiny is flowing through directly to what homeowners pay.

Properties with unidentified or poorly understood hazard exposure are increasingly facing rising premiums, reduced coverage, or in some cases, difficulty obtaining insurance at all. The cost of not doing proper due diligence shows up on your insurance renewal every year.

Why buyers get it wrong

Part of the problem is that the information is fragmented. Natural hazard data sits across council portals, LINZ records, regional hazard maps, and insurance databases - none of which talk to each other in a way that is easy for a buyer to navigate.

More than a quarter of buyers who skipped hazard checks said they simply didn't know where to find the information. A further 20% didn't know what information was even available.

Part of the problem is also misplaced confidence. Research shows that 78% of homeowners feel confident assessing property risks, yet 49% of those same people are relying on gut feel to do it.

Confidence and capability are not the same thing.

There is also a widespread assumption that if a property has been consented by a council, it is safe and insurable. This is not the case. Councils have historically consented developments without comprehensive hazard assessments in place, and in some cases under pressure to open up land that carried material risk.

The person who buys that property inherits that risk; whether they know it or not.

What the interested parties won't tell you

When you buy a new-build investment property, the information environment around you is almost entirely controlled by people who benefit from the transaction completing.

The developer wants you to proceed. The salesperson gets paid when you sign. The marketing brochure was designed to sell, not to inform. None of these parties have an obligation, or an incentive, to surface the things that might give you pause.

That is not a criticism of developers or salespeople. It is simply the structure of the market. But it means that the burden of independent due diligence falls entirely on the buyer, at the exact moment when they are most exposed to motivated reasoning and time pressure.

What independent assessment actually looks like

At Paragon Property Ratings, we assess new-build residential properties across four pillars:

• Build quality

• Cashflow

• Growth profile

• Location/risk - including flood and hazard exposure

Every assessment is independent. We do not sell property. We receive no commissions.

We have no relationship with developers or salespeople. Our only output is the report.

The result is a structured, data-driven score that gives buyers something the interested parties cannot: an honest picture of what they are actually buying.

That includes the things that are harder to see in a brochure - holding cost sensitivity if interest rates rise, hazard exposure that affects long-term insurability, build quality indicators that determine maintenance costs over time, and growth profile data that tells you what a suburb has actually delivered over 20 years rather than what a salesperson projects it will deliver.

The bottom line

New Zealand's property market is not getting simpler. Natural hazard risk is increasing and insurance costs are rising.

The information gap between what buyers think they know and what they actually know is wide and the consequences of that gap are getting more expensive.

Gut feel built a lot of wealth in the New Zealand property market over the past 30 years. The conditions that made that possible - rising values, cheap insurance, forgiving interest rates - are no longer a given.

The buyers who navigate the next decade well will be the ones who treat property the way it deserves to be treated: as a significant financial decision that warrants independent, data-driven analysis before they commit.

About Paragon Property Ratings

Paragon Property Ratings provides independent property assessments for New Zealand residential new-build investments. Reports cover build quality, cashflow, growth profile, and location and hazard risk - delivered within 72 hours from $229.

Paragon does not sell property and receives no commissions.

Learn more at paragonratings.co.nz

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