Where in Taranaki could you afford to buy a home?
The combination of soaring house prices, low stock and growing demand is making it harder for first home buyers to enter the Taranaki property market.
Jamie Gemmell, Western First National real estate consultant in Taranaki, said the competition has created a tough market for those wanting to take a first step on the property ladder.
‘‘I personally feel really sorry for them,’’ she said.
‘‘When these first home buyers are looking at a house, there might also be an investor in the mix or a second-home buyer with more behind them.’’
Latest figures from realestate.co.nz showed the number of homes on the market has dropped nearly 16 per cent to 204 listings, while more people have rushed to view the limited supply, pushing up demand by about 28 per cent and placing Taranaki in the top three regions of New Zealand in terms of demand.
And as of August, the average asking price in the region hit $405,105 – a record breaking number for Taranaki.
As buyers rush to pick up what’s available, the selection within the first home buyer What income do you need for a first home in the three districts of Taranaki?
Mortgage repayments should be no more than 30 to 40 per cent of one’s gross income, personal finance website sorted.co.nz said. We based our calculations on 33 per cent of income as most banks will require this amount.
Based on the average New Zealand income of $60,738.60, the average Kiwi could afford a weekly mortgage repayment of $385.45.
This would be quite achievable in
bracket of about $350,000 was even scarcer, Gemmell said.
Competitive buyers laying down unconditional offers didn’t help either, she said.
A conditional offer means the buyer has requirements before a purchase can be made, whereas an unconditional offer means the buyer will purchase the house without any additional work for the seller to complete.
For a seller, conditional offers are less appealing, Stephanie Murray, of Stephanie Murray Mortgages, said. Hawera where the average house price is $205,833.
A first home buyer would need be earning $38,844 a year to afford the $185,249.70 mortgage, which works out to be $249 a week after a minimum 10 per cent deposit of $20,583.30.
To buy a home in the central Taranaki town of Stratford, where the average house price is $244,076, you’d need to earn $46,020 a year to afford repayments of $295 a week after a minimum 10 per cent deposit of $24,407.60.
‘‘If I’ve got two conditional offers in front of me and one unconditional that’s offering slightly less than what I’m asking I’m going to go for the unconditional,’’ she said.
For first home buyers ‘‘in a competitive situation, it’s not ideal’’.
Before placing an unconditional offer on the table, buyers with less than a 20 per cent deposit are required to obtain a registered valuation.
This includes getting title checks, and sometimes building
However to afford to live in New Plymouth, where the average house price is $426,255, you would need to earn $80,340 a year.
If you were able to scrape together the 10 per cent deposit of $42,625.50, the mortgage of $383,629.50 would cost you $515 a week.
But this doesn’t look as unreachable when compared to Auckland. The average house price in the city is $1,232,779, which would cost a cool $123,277.90 for a minimum 10 per cent deposit.
inspections, which costs money, takes time and still does not guarantee an accepted offer, Gemmell said.
‘‘So the first home buyers are missing out because they can’t afford unconditional offers.’’
The current market for first home buyers in New Plymouth ‘‘is hard at the moment’’, Murray said, and buyers are getting pushed ‘‘to the outskirts’’ of Inglewood, Waitara and Stratford.
But Murray believed it was still possible for first home buyers, they just needed to know how.
Even for a couple to pay back a mortgage of $1,109,501.10, or $1,285 a week, would be a stretch.
You would need to be earning at least $200,460 a year to afford the repayments - and that doesn’t include electricity etc.
As for the average weekly rental: Hawera is $235, Stratford is $250, New Plymouth is $326.75 and Auckland is $540.
Data found on: Statistics New Zealand, KiwiSaver, QV.co.nz, and Kiwibank’s mortgage calculators
‘‘It’s such a process and no one actually teaches you how to do it,’’ she said.
‘‘A lot of people don’t realise they can get a [Kiwisaver Home Start] grant.’’
For this reason, Murray hosts First Home Buyers evenings which walks people through the ins and outs of how to purchase a first house.
But it could end up taking months, even years.
Homes in New Plymouth rose $2000 from July to August, QV Property Valuation said, which put the average value at $426,255 – eight percent more than last year’s average.
Stratford had an $8000 jump in housing value between July and August, as the average home hit $244,076 – a 10 per cent jump from $221,837 the year prior.
South Taranaki District also saw an influx with a seven per cent increase to $205,833 as of August – $6000 more than July.
And this trend will likely continue, Gemmell said.
She said some first home buyers have had to seek help from family in order to afford a deposit.
The unreachable property ladders in Auckland, which saw the average house price climb to $1.23 million, has further pressured the market in Taranaki as people from outside the region encroach in.
‘‘I’m seeing a lot of Auckland, Australian and even Wellington - mostly young couples - buying here because it’s more affordable,’’ Gemmell said.
She’s also seen a lot of ‘‘second time rounders’’ who have built up equity from their first home and are ready for the next rung on the ladder.
But Gemmell hoped more homes would hit the market come summer, easing current demands on the market.