Auckland prices stabilise: What does it take for buyers to get in?

Thursday, 11 October 2018

A $65,000 deposit may well be enough, but then comes the repayments

Twenty-four thousand lattes. Sixty thousand avocados. About 500 years of Netflix.

If you're trying to get into the Auckland housing market, that's what it could cost you.

The Real Estate Institute's data for September shows Auckland's median house price has been stable at $850,000 for the past 18 months.

Chief executive Bindi Norwell said it was positive for first-home buyers who were saving to buy a property.

* Property managers prepare for possible regulation**

'However, it's also good for investors, buyers and sellers too, as it means that everyone knows what the market is doing – there don't tend to be too many happy people when the market is particularly volatile.'

A deposit on a median-priced house in Auckland is about 24,000 lattes.

ASB economist Kim Mundy said for the first time in many years, Auckland was a buyers' market.

'Uncertainty and affordability constraints have slowed the Auckland market after a prolonged period of strong house price growth.'

But if this is the new normal, how can you get there?

Most first-home buyers would choose to buy a house that is cheaper than the median. But for the purposes of this calculation, assume you're planning to spend $850,000.

To get the best bank rates and have your choice of the lenders, you'll need to have a deposit of 20 per cent, or $170,000.

KiwiSaver might help a bit - data from the Financial Markets Authority shows first-home buyers in the past year withdrew an average $22,541 each to buy their houses.

If you are buying in a couple, that still leaves about $120,000 to save.

Are you trying to buy a house and willing to share your story? Email susan.edmunds@stuff.co.nz

To make up that difference simply by cutting you would have to give up 24,000 lattes, 60,000 avocados at the current Countdown price of $2 each, or about 500 years of premium Netflix.

More seriously, it will still take some serious savings.

You would need to put aside $523 a week for the next four years in a fund or term deposit paying 5 per cent a year to reach that goal - or $261.50 each. Auckland's median income gives about $1139 a week after tax.

Another option would be to lower your savings target.

Broker David Windler, of the Mortgage Supply Co, said it was standard for first-home buyers to get a loan with 10 per cent deposit, or $85,000 of $850,000.

That would mean only $35,000 to top up on a couple's KiwiSaver - you could save that in two years in a bank account if you could put aside $330 a week.

'At 90 per cent lending the pricing is different, banks put a margin on rates and you don't get the specials you would at 80 per cent, but it halves your journey,' Windler said.

Even if prices are stable, Auckland buyers still face a battle to save.

You could also look to more affordable parts of Auckland.

Spokeswoman Dee Crooks said the institute's data showed there were some areas that were more affordable than others. The Franklin ward now has a $705,000 median price, Manukau $672,500, Manurewa/Papakura $662,000 and Waitemata $535,000 – although she warned that was driven by cheaper apartment sales. 'Apartments are still an affordable option for first-home buyers to get into the market.'

Windler said he was seeing first-home buyers look to west and south Auckland because they could get houses big enough to get a boarder in. Many were flatting with others already and did not mind the idea of continuing to do so once they owned the house.