KiwiBuild: $300 saver
Buyers in scheme likely to pay back lot less per week
Buying a KiwiBuild house could save first-home buyers $300 a week in home-loan repayments over the next 30 years. That’s according to figures obtained by the Herald, showing Auckland’s first 50 KiwiBuild homes sold for an average price of $564,000.
This was $292,467 less than the average $856,467 price paid by other first-home buyers for their properties last year, according to data by analysts CoreLogic.
It meant the average KiwiBuild buyer could save more than $300 per week in repayments on a 30-year home loan compared to typical firsthome buyers if both saved 10 per cent deposits and secured interest rates of 5 per cent.
The prices showed the Government’s flagship building programme was opening up “home ownership to a much wider part of the community, who otherwise struggle to get on the property ladder”, a KiwiBuild spokesman said.
However, KiwiBuild also continued to face an uphill battle to deliver enough homes fast enough, with the Government well behind in its initial target of building 1000 homes in the policy’s first year.
The KiwiBuild website showed just 62 homes had been completed by midFebruary, while a further 279 were being built and 10,355 had contracts signed and were awaiting construction.
About 60 homes — some completed, some still under construction — are up for sale in Auckland.
Most were listed for sale last month but some have been on the market for longer, leading critics to question whether the homes were welldesigned for first-home buyers and if they were being built in the right locations. Added to this, the Reserve Bank last month predicted the policy would create an extra 7100–14,200 homes in New Zealand by 2022 — far below the 100,000 the Government first trumpeted. Despite that, KiwiBuild prices appear to compare favourably to the $856,467 average price paid by the 8350 first-time buyers who last year bought in Auckland.
Loan Market mortgage adviser Bruce Patten calculated buyers would need a minimum 10 per cent deposit of $85,600 and have an annual combined income of about $150,000 to be granted the $770,000 loan needed to buy homes at that price. This would mean up to $850 weekly repayments over 30 years on current record low interest rates of 3.99 per cent or $950 per week repayments on 5 per cent rates.
By contrast, the average KiwiBuild buyer would need a $56,400 deposit, before making $557 weekly repayments over 30 years on current interest rates or $627 a week on 5 per cent rates.
Half of all Auckland KiwiBuild buyers also had family incomes below $100,000, while 28 per cent were below $80,000. Auckland’s average household income is $125,000.
The 50 KiwiBuild homes sold ranged from one-bedroom studios to four-bedroom homes in the suburbs of Huapai, Pukekohe, Mt Albert, O¯ta¯huhu, Onehunga and Papakura.
OneRoof editor Owen Vaughan said the figures showed KiwiBuild might grow into a credible option for buyers who felt Auckland was too expensive.
“The big hook will be whether these KiwiBuild homes retain and rise in value at the same pace as other homes in the market,” he said.
Nick Goodall, head of research from analysts CoreLogic, expected KiwiBuild homes to become more desirable if more were built.
First-home buyers were becoming increasingly willing to move to Auckland’s outer suburbs and to buy townhouses and units rather than traditional homes with backyards, he said.