It looks like the Auckland house price market at least is softening somewhat, and asking prices are dropping. So The Detail sent our millennial reporter Alex Ashton out to a mortgage broker to do the sums.
The numbers are still stacked against first time buyers. High prices and restricted lending mean it’s arguably harder than ever before to get a slice of the quarter-acre dream in New Zealand – in spite of record low interest rates.
If you do manage to get something, the dream will likely look less quarter-acre and more studio apartment 30 minutes out of the city.
Ashton asked mortgage broker Bruce Patten, from Loanmarket in Auckland, what options he had if he was to take advantage of the currently stalled market.
Patten says it’s still possible to get on the ladder, but admits single people looking to buy on their own will have a particularly hard time.
You have to have been in KiwiSaver for three years to access it, but if that’s the case you may be eligible for top up grants as well, especially if you’re getting a new-build. If you use KiwiSaver for a deposit you have to live in your purchase for at least six months.
Patten says people are delaying buying, teaming up with friends, or calling up their parents to help them on their way.
But he says only about one in 20 people buying in Auckland today would be single – 10 years ago that number would be more like three in 10. “So it’s considerably changed.”
House prices have doubled in 10 years, and incomes haven’t kept up.
Patten says single people will have a better chance outside of Auckland, in regions where property is cheaper, but concedes their earning potential will likely be less. He says those who move to the regions are often on jobs with nationally fixed salaries such as police, teachers or fire and emergency employees.
Even going for an apartment means coming up against bank rules over minimum sizes and lending restrictions. “Some banks are probably a little bit more likely to take a risk on apartments than others.”
He also says those not fortunate to have friends to go in with, or home-owning parents to help, have little choice other than to keep saving as much as possible.
Patten estimates now that between 30 and 50 percent of cases, the parents have pitched in somehow.
And Ashton’s best bet? Find a friend who’s in the same position as he is, get lawyered up and do a deal.
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