Residential sales stats
According to REINZ:
"Median house prices increased in 14 out of 16 regions across New Zealand during February 2018 compared to February 2017, including a record high in Hawke's Bay. The only regions not to experience an increase were the West Coast and Gisborne which saw decreases of 10.7% and 3.1% respectively," says Bindi Norwell, REINZ CEO.
National median house price: $530,000
Auckland median house price: $858,000
Median days to sell: 44
The below table shows the median house price across New Zealand as recorded in February 2018.
|Location||Median house price|
|Bay of Plenty||$553,000|
|NZ excl. Auckland||$450,000|
|New Zealand Total||$530,000|
Data sourced from REINZ.co.nz.
The REINZ House Price Index shows:
National +3.9% on February 2017
National ex Auck +6.9% on February 2017
Auckland +1.1% on February 2017
National +1.4% on January 2018
National ex Auck +1.3% on January 2018
Auckland +1.4% on January 2018
Where should I live?
When you’re deciding where to live there are lots of things to consider. Some of it’s rational, but lots of it will be emotional. If you’re a couple buying together you’ll probably have differing priorities, so finding a middle ground can be a fantastic lesson in compromise. You’ll need to consider how you want to live and how long you’re planning to stay. Do you want to be close to friends and fun places to eat out? When it comes to commuting, how far is too far? If you have kids or are planning them, are the schools and community to your liking?
Location, land and community
It really is true that it’s better to buy the worst house in a good street – and it’s not just because the value of your house will go up. You may not realise just how much impact your community can have on you – horrible neighbours can make life hell.
Follow the sun
Amazing what a difference a bit of sun can do for even the most run-down property. Make sure you double-check the aspect of any house, so you know where it gets the sun and what rooms will be the warmest.
Do your research
Get your sleuthing hat on so you know everything about the house before you buy. Talk to neighbours, run Google searches on the house, street and area, check at night for street lighting and noise. Questions to ask yourself are:
- What is the neighbourhood like?
- Is it quiet at night?
- Is there much crime in the area?
- What happens when it rains?
- Are neighbours aware of any future development activity?
With leasehold you own the building but you don’t own the land. Banks will generally only lend up to 65% on leasehold property.
There are typically two types of leasehold. Church and Maori leasehold tends to be lower risk and better quality because they’ve been around longer and are more consistently priced. Commercial leasehold is riskier. Many of the inner city apartments that have developed recently have used low “honeymoon” lease costs that jump up as much as 100% at the next ground rent review date.
Your key considerations are how long it is until the next review and how much will they increase?
Leasehold can be really useful in some cases. It allows people to live in areas and in a quality of building they otherwise could not afford. The most important thing is making sure that it’s priced properly.
This is where you own the whole lot. Long-term, the value of your property will be in the land.
This was popular in the 70s and 80s as a cost effective way of subdividing properties. Essentially you own a share of the freehold title. The only thing to be aware of with cross-lease is that it may need sign-off from other owners before you can change the footprint of your house. Although uncommon, there could be other restrictions on the title that need to be checked out by your lawyer.
Strata or unit title
This form of ownership is common for apartments, townhouses and units. It is used to ascribe ownership within a development. You will have ownership of your unit and an undivided share in the ownership of common areas.
There will be Body Corporate fees associated with unit titles that pay for the upkeep of the common areas and services.
Usually has a roof, windows and a door. Like Playschool, only real life.
These are semi-attached and usually on a cross-lease or strata title. Banks are a little more nervous about town houses in larger developments so may restrict lending to 70%. They tend to be more favourable towards properties built in the 70s and less favourable towards anything built after 1985. Clearly, they don’t make them like they used to.
Apartments are increasingly popular with buyers because of the low entry prices, though they’re not viewed positively by lenders. This can make it much more difficult to get a mortgage on an apartment, but has also seen the price of apartments drop. Some banks are not lending on apartments at all, so it is worth talking to us first if you’re thinking of grabbing an inner city pad.
Apartments are a bit of a weird beast. Often banks won’t lend on the cheapest places at all because they’re too difficult to rent. For apartments like these, which tend to be less than 50sqm or leasehold, you’ll probably need a 40% deposit. Larger apartments with two or more bedrooms that are freehold will need 20%-30% deposit as long as you have a good stable income.
To really educate yourself on apartments, spend a night at a tired, old, cheap hotel (just take your own pillow). You’ll notice what happens to apartments that are cheaply made and not well maintained – it feels really run down, shared areas will be scruffy, views blocked by newer buildings and street noise will be very noticeable. Apartments with potential will be soundly built and mostly owner-occupied, with safe entry and exit from the building at night and great proximity to supermarkets, parks and transport.
Built with native timbers these were built pretty solid so last fairly well.
Things you should watch out for:
- Some insurers will need old wiring to be completely replaced before they’ll sign off on a replacement-cost policy. You’ll generally need this kind of policy to get your home loan so make sure you check this out before going unconditional.
- These houses often need to be re-roofed, costing around $10k and re-piled, around $15k.
This period tended to have small windows and cramped living spaces to trap in heat. You’ll often find the layout in these places are at odds with modern living, so you’ll need to move walls around. That makes them expensive do ups.
Not only are houses in this era pretty fashionable at the moment, they’re made from enduring materials and are often positioned well for sun with great indoor-outdoor flow. Asbestos was widely used in the 1960s and 70s. Asbestos is safe if you just leave it alone (kind of like a pimple). Check whether or not internal ceilings are asbestos because some lenders will restrict lending to 80%. Asbestos ceiling can be removed by specialists for around $5k.
Insulation only became compulsory in 1979, so houses built before then might not have any. Brick and tile houses will be particularly cold and have issues with mould – look for it on south-facing walls.
This is the era of dodgy building practices and the infamous “leaky building”, so it pays to be careful.
Things to look out for:
- Monolithic cladding systems (“plaster houses” and panelling)
- Lack of eaves (roof overhangs)
- No window flashings (integrated metal trim above a window that deflects water)
- Balconies integrated into the cladding system (“solid”)
- Cladding or framing touching the ground
New building codes fixed the dodgy practices of the previous decade. Enough said.
Should you buy first or sell first? Should you sell at all? If you’re looking at getting into your second home, talk to us first. It’s a great time to review your financial position and make sure you’re getting the best possible deals and advice.
The thing to remember is that interest compounds. When you save money, this means you earn interest on the interest and so on. When you’re repaying a mortgage this works in reverse – the less you owe, the less interest you pay.
Sound complicated? What it boils down to is that small increases in your regular repayments will have a massive impact on your interest costs in the long run.
Regularly paying a bit extra can make a massive difference.
Having the right structure and rates pays big dividends in the long run.
- Regularly paying a bit extra makes a massive difference
- Having the right structure and rates pays big dividends in the long-run
In the following example the borrower will save $141,000 in interest on their mortgage and reduce the loan term by 10 years simply by increasing their repayments by $450 per month.
|Payment amount (monthly)||$2,209||$2,659|
|Mortgage term (years||30||20.5|
|Reduction in interest||36%|
Things you can do:
Negotiate better rates with your bank.
A 0.50% rate decrease will reduce your term by 3.5 years and save $100,000 in interest.
Keep your repayments the same when rates drop.
Increase your repayments whenever you increase your income (a 3% increase in your repayment amount each year will reduce the loan term by 12 years).
When you first eyeball your mortgage it can seem scary. You’re borrowing a hell of a lot o...Read More ›