Buying a property is only the beginning. The Real Cost of Homeownership in New Zealand goes well beyond your mortgage, with rates, insurance, maintenance and utilities all putting pressure on household budgets.
The Real Cost of Homeownership Starts After You Get the Keys
When most people think about buying a home, they focus on the deposit, mortgage repayments and interest rates. James and Mike argue that those are only part of the picture.
Owning a property also means paying for council rates, house insurance, contents insurance, water charges and ongoing maintenance. While each cost might seem manageable on its own, together they can make homeownership far more expensive than many buyers expect.
That becomes even more noticeable with older homes. As Mike explains, maintenance costs tend to increase over time, and repairs can quickly add up if you’re not prepared for them.
The Cost of Homeownership Keeps Rising
One of the biggest challenges for homeowners isn’t just the number of expenses – it’s that many of them continue to increase every year.
James points to Auckland’s latest average rates increase of 7.9% for the 2026/27 year, while noting that rate increases across many of New Zealand’s major cities have climbed significantly over the past three years.
According to the figures discussed:
- Wellington rates have increased by almost 50% over three years.
- Queenstown rates are up 55%.
- Hamilton has seen increases of around 43%.
- Auckland’s cumulative increase is around 28%.
Mike says homeowners often focus on their mortgage repayments but forget that rates continue to rise regardless of interest rates.
Insurance Is Becoming Another Major Household Cost
Insurance is another expense putting pressure on homeowners.
James says the average house insurance premium in New Zealand is now around $2,900 per year, an increase of 43% since 2022. Average contents insurance has also climbed to around $800 annually.
For homeowners in Wellington, the costs are even higher, with average house insurance sitting at around $4,000 per year due to earthquake risk.
The rising cost of insurance is beginning to change people’s behaviour too. James notes that 17% of New Zealand households dropped their insurance over the past year because they could no longer afford it.
Mike believes many people assume insurers are simply making larger profits, but says the higher premiums largely reflect increasing repair costs, more frequent extreme weather events, higher rebuilding costs and rising reinsurance costs.
Water Bills And Maintenance Continue To Add Up
James and Mike also discuss the growing cost of water charges.
In Wellington, residents are now paying separately for water rather than having it included in their rates. Water charges have increased by around 14% over the past two years, adding another ongoing expense for homeowners.
Then there are the maintenance jobs that eventually come with almost every property.
Some of the common costs they mention include:
- Roof repairs
- Exterior painting
- Fence repairs
- Driveway maintenance
- Plumbing repairs
- Electrical work
- Heat pump servicing
- Replacing household appliances
- Gutter maintenance
- Weatherproofing
- Hot water cylinder replacements
James notes that replacing a hot water cylinder alone can cost between $1,500 and $3,000.
Budget For More Than Just The Mortgage
One message comes through consistently during the conversation: don’t judge a property’s affordability based solely on the mortgage.
Mike says this is particularly important for property investors. A property might appear cashflow neutral once rent covers the mortgage, but that’s before factoring in insurance, rates, maintenance and every other holding cost that comes with owning real estate.
Towards the end of the discussion, James estimates these ongoing ownership costs can add up to around $250 per week on average.
That doesn’t mean buying a home isn’t worthwhile. James finishes by saying homeownership remains an important part of a good financial plan, but it isn’t “all rainbows and unicorns.” Going in with realistic expectations and budgeting for the full cost of ownership can help avoid expensive surprises later.
Key Takeaways
- The mortgage is only one part of the cost of owning a home.
- Rates, insurance, water charges and maintenance can significantly increase your ongoing expenses.
- Rates have risen sharply across many New Zealand cities over the past three years.
- House insurance premiums have increased substantially since 2022.
- Some homeowners are dropping insurance because of rising costs.
- Older properties often require more ongoing maintenance and repairs.
- Property investors should budget for holding costs, not just mortgage repayments.
- Factoring every ownership cost into your budget can help avoid financial surprises.
Next Steps
If you’re buying your first home, upgrading or investing, Lighthouse Financial can help you understand the true cost of ownership.
If you’d like to watch more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
