It’s no secret to anyone that buying a first home in Auckland is like climbing Mt Everest - it’s a massive achievement that few get to realise, and the road to the top is long and fraught.
The metaphor might seem a bit exaggerated, but not so much when you learn that the average Auckland Area residential house area grew from an already eye-watering $700,000 in March 2014 to $1.05 million in March 2017… that’s about $100,000 more each year for the past three years.
Unlike the provinces, where buying property often involves making a relatively calm and civilised offer on paper in a nice real estate office, Auckland is a world of its own. Here, first home buyers jostle with investors, and each other at auctions on lawns across the city, watching ruefully as another property dream is snatched away from way, way above their budget.
So how do you buy property in Auckland? Here are a few tips...
Send for help
There are reports that it now takes seven years for an Auckland first home buyer to save a 20% home deposit, so you have plenty of time to explore what help, if any, you qualify for to get into a home.
The Government’s Welcome Home scheme allows first home buyers to buy with just a 10% deposit, but there’s a catch. If you use this scheme, you can only spend up to $600,000 on an existing or older property, or $650,000 on a new house. This rules out a fair chunk of Auckland: As at 2017, there were only a handful of places in Auckland with a median selling price below $650,000.
*Note that Housing New Zealand’s other first home assistance programme, where eligible people can receive a grant towards buying a Housing New Zealand property, isn’t available in Auckland.
How much you qualify for under this scheme depends on how long you’ve been contributing to KiwiSaver.
If you’re buying or building a new home, you’ll get $2,000 for each year that you’ve contributed to your KiwiSaver account. The minimum you can get is $6,000, or three years of contributions, and the maximum is $10,000.
For an existing home, you’ll get $1,000 per year of contributions, to a maximum of $5,000.
The Bank of Mum and Dad
Increasing numbers of Kiwi first home buyers are turning to their parents and grovelling for a springboard onto the property ladder. And many parents are doing just that for their beloved offspring, using equity on existing property or taking out a new mortgage.
Of course, not everyone can do this, and there’s a risk that parents might dig a financial hole they can’t climb out of. To prevent this type of overzealous parental love, the Responsible Lending Code has been adjusted to ensure that those who have superannuation as their only income and who own just one property, for instance, can’t take out a new and substantial mortgage for their child.
Become a property addict and be ready to pounce
Every now and then, a house that you can actually afford may pop up out of the rough seas of unaffordability. Scour the listings, be on every agent’s mailing list for property alerts before they hit the open market, and share your addiction with everyone you know.
It may just be that someone you know’s grandmother is selling the family home, which is in a highly original (aka dated) state and she needs a quick, easy sale. Once you’re pre-approved by your bank for a loan, you’re in an excellent place to try and be the hassle-free answer to her problem.
Location location? Not any more
Your grand plans of buying a slightly rundown but perfectly fine villa in Grey Lynn will probably be a stretch as a first home buyer in Auckland. Stop lurking in the property listings of broken dreams and widen your search geographically - and then widen it some more.
Make it a priority to buy a house almost anywhere in Auckland, with the intention of moving up the property ladder in future, rather than waiting for eternity for a Grey Lynn miracle.
Did you know that Ngaruawahia is the new Auckland? Well, not quite - there’s no Skytower yet, but it does have a bridge. Areas of the Waikato that are reasonably close to the big smoke are increasingly becoming an affordable option for Aucklanders. This, of course, is putting pressure on housing and rental markets in these areas, so be quick.
Returning to your parental home, hand outstretched and tail between your legs, may be the only way of saving for a house deposit. Just make sure your folks are ok with it first, and throw in some offers to cook dinner and pay rent too.
Buying your first home with a friend, a group of friends or members of your family, is one way first home buyers are getting onto the property ladder. Pooling resources to buy a house, or an apartment, is completely sensible, but ensure you do your research and get legal advice so you’re protected if things go wrong.
Clear the slate of debt
Any debt you have (e.g. hire purchase, credit card limit or another loan) will count against you when it comes to applying for a mortgage. Prioritise pay other debts off before you head to the bank because, in Auckland, every cent helps.
Practise your auction poker face
Because most properties in Auckland are sold by auction, take time to prepare yourself by learning about the process, attending a few for research purposes and ensure you have all your due diligence lined up perfectly before going into battle.