New builds are becoming an increasingly attractive option for property investors in New Zealand. With lower deposit requirements, exemptions from Reserve Bank restrictions, and strong demand for modern housing, it’s no surprise they’re gaining momentum again.
At ASAP Finance, as a specialist development lender, we’ve seen a surge in property development funding requests for new projects as both developers and investors move to take advantage of the current landscape. This article explores why new builds are getting attention and how you can leverage the trend.
Why Investors Are Choosing New Builds
The main reason investors are choosing new builds is the ease of securing funding. Lower deposit requirements and exemptions from LVR and DTI restrictions make them particularly attractive.
Under current Reserve Bank of New Zealand (RBNZ) loan-to-value ratio (LVR) rules, investors need a 35% deposit for existing properties. New builds, however, benefit from a carve-out in the BS19 framework which exempts them from both LVR and proposed debt-to-income (DTI) limits. In practice, this means there are no formal restrictions on leverage for new builds. Instead, banks apply their own policies – typically requiring a 10–20% deposit and capping lending at 80–90% LVR.
This carve-out specifically covers construction lending. It applies when a borrower is building a new home, purchasing a newly built home from a developer within six months of completion (often referred to as buying “off the plans”), or purchasing through the Government’s KiwiBuild programme. These situations fall within the exemption, giving lenders greater flexibility and investors more accessible leverage.
Furthermore, banks often provide more favourable incentives for new builds as well. These can include discounted rates (ANZ currently offers 0.60% off fixed and 1.25% off floating under their blueprint to build product), cashbacks of up to 1% from major lenders (ANZ, ASB etc), and green build incentives, including extra discounts and products for energy-efficient homes.
While the era of 1.99% mortgages is gone, new builds continue to benefit from competitive pricing, with floating rates for eligible borrowers around 5% depending on profile.
Where Are the Opportunities?
For property developers focused on the investor market, infill developments , particularly townhouses and terraces in established centres like Auckland, Hamilton, and Christchurch – remain the most in-demand product. Investors are looking for well-located, low-maintenance properties that appeal to tenants and deliver steady yields. This means product selection and design need to be geared towards what investors value most. Key considerations include:
- Transport connectivity – close to arterial routes, motorways, and public transport for commuting tenants
- Tenant appeal – proximity to employment hubs, education providers, and retail amenities
- Design efficiency – practical layouts, low-maintenance materials, and compliance with Healthy Homes standards
- Rental return – balancing build cost against achievable rents in the area
- Market absorption – ensuring supply levels of similar stock are not oversaturating the suburb
- Investor affordability – price points that fit within common investor LVR/deposit requirements
- Exit strategy – stock that can be sold down easily to multiple smaller investors, rather than requiring one large purchaser
Greenfield developments also present opportunities, especially in high-growth corridors like Rolleston, Pokeno, and Silverdale. However, developers need to carefully assess the target audience. Many greenfield subdivisions are driven by owner-occupier demand, which can leave investor stock harder to shift. Identifying which subdivisions have strong rental demand and investor appetite is critical to project viability.
ASAP Finance provides tailored development finance solutions for both infill developments (townhouses, terraces, and multi-unit projects in established urban areas) and greenfield subdivisions (large-scale residential projects in growth corridors). Our solutions include no-pre-sale construction funding, no valuations required, milestone-based drawdowns (no QS appointment needed), GST facilities, and serviced or capitalised interest options.
What to Watch Out For
New builds are not always the best fit for every investor.
- Limit scope for value-add – new builds offer limited potential for adding value through renovations, subdivision, or development. Most of the upside is already captured by the original developer, leaving future capital gains tied largely to broader market growth.
- Risk of oversupply – Large-scale property developments can flood local rental markets, leading to longer vacancy periods and delayed rental income.
- Over-capitalisation – Not every new build works as a rental. Higher-spec homes often deliver poor yields if the additional cost (or higher purchase price for the home) cannot be recovered through higher rents, leaving investors exposed to weaker cash flow.
In all situations, investors should focus on yield, location, and tenant demand rather than glossy brochures or IM’s.
Are New Builds a Good Investment?
They can be – but it depends on your strategy. If your goal is long-term passive returns, low maintenance, and taking advantage of favourable bank lending incentives, new builds are ideal. If your strategy is value-add, renovation-driven, or short-term flipping, then older properties may be more suitable.
Final Thoughts
The market has shifted. With lower deposit requirements, exemptions from LVR/DTI limits, and better bank lending incentives, new builds have once again moved from a niche play to a mainstream strategy for investors.
If you’re a developer looking to meet growing demand ASAP Finance provides flexible lending criteria with no pre-sales, no QS, and no registered valuations required.
Ready to take the next step?
Contact the team at ASAP Finance for fast, flexible funding tailored to new build projects.