Bay of Plenty rents have just been shaded by Tāmaki Makaurau.

The average median rent in the City of Sails went up by 3% compared to last month, reaching a national high of $680 per week.

It’s enough to make a renter want to buy.

And why not – national property prices are down, Auckland sales in June 2024 have dropped 35% year-on-year, and new listings for the first six months of 2024 were up 27%.

Increased supply, less competition, things are looking up for first home buyers.

Buying a home is still a tough nut to crack

Auckland house values have dropped for the past five months in a row, but the average value is still an eyewatering $1,250,306.

The Reserve Bank’s new DTI lending restrictions – under which banks will be able to approve 20% of new owner-occupier lending to borrowers with a DTI ratio over six – mean a first-time home buyer with a 20% deposit ($250,000) will have to be earning north of $160,000 p/a.

That’s a big financial hurdle.

Still, turns out there are plenty of deep-pocketed first home buyers in the market – across New Zealand, first home buyers accounted for 26% of property sales in the first quarter, well above the long-term average of 21%.

Options

If muscling up a 20% deposit is just too hard, or you earn a more modest wage, consider these options:

  • Select a bank offering a First Home Loan underwritten by Kāinga Ora: A 5% deposit could be enough to secure a home loan
  • Don’t compete with developers: Look at sections under 600m² (too small for subdivision) and even consider buying property with a cross-lease title
  • Access KiwiSaver funds: First home buyers who have been contributing to KiwiSaver for three years or more can withdraw all their funds except $1,000 to put towards a first home
  • Buy an apartment: The median sales price for apartments in Auckland City were $550,000 (October 2023) and average asking prices have tumbled since
  • Consider co-ownership: Team up with friends, siblings, or parents to own a property as tenants in common. Shares in the property can be equal or unequal, depending on how much each party contributed to the cost of buying it. Any gains made on the property are shared proportionately. Note that the property will not become part of either joint owner’s estate. So, if a house has two joint owners and one owner dies, the other owner automatically becomes the sole owner of the whole property. This is regardless of what the deceased owner put in their will
  • Hit up your parents or other family members to help with your deposit: Family members can either gift the money or loan it under a deed of acknowledgement of debt, which may be recalled if the recipient’s relationship breaks down
  • Secure a guarantor (usually a parent), which will make it easier to borrow: Though things can get dicey if you’re unable to meet your debt repayments
  • Forget about do-ups – banks often decline loans on houses that require work: You might convince them otherwise if you can demonstrate the financial means to cover the cost of improvements.

Don’t live in your first home – rent it to others. You’ll be better off financially. Call 0800 GOODWINS for a rental evaluation. Your first home might be closer than you think.