Window of opportunity?
Young house buyers speak out
New data shows that the deposit hurdle for firsthome buyers has dropped - a bit. Homes.co.nz has released price information that shows that lower-quartile homes in Auckland are now cheaper than they were at the start of the year.
On the North Shore and Rodney, the typical value of a first home is now $777,000, requiring a deposit of $155,400 in March. That is $5300 less than was needed the month before.
In south and east Auckland, the deposit required has dropped $4225 month-on-month to $120,200 on a $601,000 home. The deposit requirement in West Auckland is now largely flat at $134,400, down from $140,000 in the middle of last year.
‘‘All areas of Auckland outside of central [Auckland] are showing a downward trend for first-home buyers. Central seems to be showing signs of life again so there’s a little pressure to get in fast if that’s your objective,’’ said Homes.co.nz spokesman Jeremy O’Hanlon.
‘‘The average deposit required for a first home is dropping at a rate of $4000 to $5000 per month in south, east and north Auckland.
He said the drop would have to continue for some time to make a noticeable difference.
‘‘Given the median deposit in Auckland since 2012 has gone from $100,000 to around $170,000, any downward trend has to be meaningful.’’
‘‘A downward, or even flat, trend at the lower end of housing stock enables savers to chip away at their target deposit, rather than have the goal posts shift every time they get close.
‘‘While the deposit is one significant hurdle, first-home buyers are still looking at scarily high mortgage repayments. Taking on a $700,000-plus
First-home buyers are still looking at scarily high mortgage repayments.
mortgage is crippling for most families.’’
BNZ chief economist Tony Alexander said $5000 would mean a lot to some people.
‘‘The question is whether the current market flattening presages a period of price falls. My answer is definitely not, given the absence of traditional triggers for sustained price declines like recession, soaring unemployment, migration collapse, and/or soaring interest rates.
‘‘Demand going forward will exceed supply growth. So the current equilibrium price will not prevail. Mild upside beckons. But for now data will be all over the place as vendors adjust their expectations and panic eases back for first-time buyers ‘‘
He said the low end of the market could be exposed to bigger market changes because of the drop in investor activity.
Auckland university student Ben Spick said the figures were little consolation as he struggled to afford rent for a place of his own.
‘‘Considering my expected salary after study is about $48,000 and my partner’s is similar, a house deposit would still take us two years to save if we saved our entire income. A drop like this doesn’t really give me any more hope and is still really unaffordable once you add rent into the equation.’’
‘‘We face a reality in which the housing crisis does exist, and many of us have come to accept that we will never own our own home. We will never see a government pension even though we will pay more tax than any generation of New Zealanders. We are the generation who you curse for moving overseas, the generation blamed for the problems of the economy and yet you wonder why when we have nothing to gain from it.’’
But O’Hanlon said the outlook was less rosy for first-time buyers in other parts of the country.
In Christchurch, the value of first homes is still rising, at $382,250, requiring buyers to have $76,450 saved. Wellington’s is also up, requiring a $118,460 deposit. Hamilton is now flat.