First home buyers shouldn't be put off by Auckland market

Housing Market Written by Squirrel , Dec 1 2016

Are you a first-home buyer in Auckland looking for property, but don't know where to start? The current market is daunting - it's expensive and there's far more demand for affordable housing than there is supply. There are developments becoming available, but in the existing market, it's difficult for first-time buyers to take ground. That's why having expert advice and prompt mortgage approvals from the experts at Squirrel Mortgages is so important.

The median house price in Auckland is $868,000, according to the Real Estate Institute of New Zealand. That's a rise of 16 per cent over the past year - an unprecedented increase. The national median house price, by comparison, is only $510,000, or a 10.9 per cent rise. Take Auckland out of the equation and the median is only $400,175, up by 8.2 per cent from last year.

There are positives to be taken from the Auckland price increases, however. For a start, capital gains are likely, making your second step up the property ladder a lot more straightforward.

Why first-home buyers should consider Auckland

The average value of a house in New Zealand's largest city is $1,045,207, according to QV data. While that is high, particularly when compared to other regions around the country, it's still only an average price, meaning half of all properties are valued below that mark, and half above. With the number of prestige houses and apartments in the city (properties valued at over $5 million), it's no wonder the end result is a median over $1 million.

Those premium homes might be increasing the average value of surrounding properties, but they will also help to make less valuable areas increase too. For example, Auckland's Herne Bay is home to the two most expensive streets (by dwelling value) in the whole country.

Back in 2012, Stack Street had a median dwelling value of $3.37 million, and Cremorne Street topped the list with $5.25 million, according to a New Zealand Herald article from October that year. A home that was sold in 1958 for $22,000 was sold in 2012 for $2.65 million. That sort of capital gain over half a century is life-changing - which is why paying more for a home now might well pay off down the track.

How can a home become more affordable over time?

When you buy a home, you don't then have to live in it until the day you sell it. In fact, 84 per cent of clients using NZ Funds to help with their investments chose to buy a house as a part of their portfolios. Only 21 per cent chose a unit. When you buy a property, you can choose to live in it as an owner-occupier, or you can choose to rent it out, and take the money from tenants as an extra source of income to help pay off the mortgage.

Auckland investors held a 43 per cent market share in property purchases, according to CoreLogic. First-home buyers don't have to be first-time owner-occupiers - they can buy a home and start renting it out, so the mortgage can be paid off without putting too much extra stress on their existing finances. That's where Squirrel Mortgages can step in.

Whether you want to live in your first home, or you want to buy it as an investment (or even do a combination of those over time), we can help you to get the right mortgage for your needs. We can also give you investment advice, regarding great places to research in different price brackets, so your journey toward your first property won't be as stressful as you expected. With our mortgage calculators, you can calculate yourself how much you can borrow for a home loan and what your repayments would be. To start this journey, get in touch today.

We can help. Have a chat to one of our advisers.