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Reflections on the Auckland Housing Market from a First Home Buyer

Resized Image Wz Yw M Cwz Nj Bd Nick Wallwork Auckland

​Midway through 2016, my wife and I decided to pack up our temporary, albeit incredibly fun life that we had created for ourselves in London, and move back home to the land of opportunity: Auckland.

The intentions for us were and have been to find jobs (thank you PatAlan, and Hamish for taking me back), save some money, start a family and fulfill the Kiwi dream of owning our own house.

7 months down the line we have achieved nearly all of these goals except for the one that is facing an increasingly growing number of young Kiwi families. We don’t own a home!

At this junction in my life I thought it would be prudent to sit down and put pen to paper/fingers to keyboard and think about the various reasons why we haven’t reached our goal yet, and hopefully provide some solutions to those people sitting in the same shoes as myself.

Issues we are facing:

  • Affordability: Living in a city with the median property price is tinkering around the $1m mark makes you think whether any first home buyer will ever be able to scrimp together the standard 20% deposit be able to buy a house. Yes I know you can put down deposits of 5-10%, but who in reality would be able to afford the repayments at the current interest rates being offered, whilst at the same time trying to live the Kiwi lifestyle most people sign up for.

  • Investors, land banking and “flipping”: All of these have been widely publicised as key issues for the unaffordability of housing. Trying to buy a house that sells for $100k more than it did 4 weeks earlier is quite simply unethical.

  • Supply: Put simply, there is not enough manpower on the ground to deliver new housing to keep up with the pace of demand. We need skilled labour at both blue and white collar levels and the demand grows daily.

  • Oversubscription: There are vast numbers of new developments across Auckland which are all very appealing to first home buyers as 20% of all new developments are affordable housing (http://bit.ly/2mXXI7F). The issue is not only qualifying to be able to buy these properties (http://bit.ly/2mXXjSG and http://bit.ly/2nlGa6y), but also that each lot of affordable housing is released at different times and often only two or three properties are available to those people who sign up for each ballot. Hundreds of people vying for a couple of affordable houses really isn’t a logical approach to the problem.

Ways to overcome these issues:

I’m going to come out and state that the following points aren’t focused at suggesting policies that the government or councils should implement. Whilst I think that there is a number of things our great government and Auckland Council could do, I do believe that at this moment in time, they are doing the best they can. Great examples of this are the creation of skill shortage lists for immigration that cater to the construction industry and the recent introduction of Auckland’s Unitary Plan and SHA’s (http://bit.ly/1rfRHdb).

  • Research: This is something my wife is especially good at! Don’t sit back and expect house prices to drop. Get on the computer, read publications and find out services are available to help you buy your first house. Things like the Welcome Home Loan (http://bit.ly/2mHzb4y) & KiwiSaver Home Start Grant (http://bit.ly/2nqPend) are excellent examples of initiatives that help people into their first homes.

  • Educate. Young parents, experienced parents please make an effort to educate the future generation the importance of savings, future planning and educated decision making.

  • Buy outside of Auckland. I bet this point has skipped over a number of people’s heads. The dream of buying a house for Aucklanders' has always been centered around buying a home that you can live in. Has it ever occurred that maybe the way to get onto the property ladder could be in buying an investment property north of Rodney or south of the Bombays? Hell, you might even be able to commute into Auckland following the completion of the Waikato Expressway and the Puhoi to Warkworth extension!

  • Don’t buy a house at all. This one is a bit of a curveball but have you ever considered in using that money intended for a deposit to invest in other opportunities such as the stock market or a business? The money made in these endeavours (with some prior education) could supply you with the nest egg that you need to buy your first property!

I hope that some of these points that I’ve made will get you thinking about the current situation that first home buyers are facing. I welcome any discussions stemming from this post and hope it will generate some talking points.

Drop me a connection request or send me an email if you want . I can be contacted through nickw@roblawmax.co.nz