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Property dreams on ice

Taking the first step on the property ladder often means thinking outside the square – yet young Aucklanders are holding back, a new survey shows.

Tuesday, March 22nd 2016, 12:00AM

by Miriam Bell

NZPIF executive officer Andrew King

Barfoot & Thompson has surveyed the first home ownership aspirations of young Aucklanders, and the results make for surprising reading. 

While 91% of those surveyed (who were between 18 and 34) want to own their own house, and 49% were actively working towards doing so, most didn’t anticipate that they would anytime soon.

Nearly a third (31%) said it would be 10 years or over before they could purchase a house. Even among the older respondents (25 to 34), 55% said buying a house was five or more years away.

Barfoot & Thompson managing director Peter Thompson said responses indicated this was due to the high costs of buying in Auckland and difficulty saving the required deposit.

This situation makes for ongoing strong rental demand, which is good news for landlords.

But it is a daunting one for those dreaming of getting on the property ladder – be it with a family home or an investment property.

Traditionally, there are options, besides buying a family home, for those wanting to secure a property.

These include buying an affordable rental property while continuing to rent, buying a smaller type of property (ie: an apartment or unit as opposed to a standalone house), or buying a property as a joint venture.

However, the Barfoot & Thompson survey indicated that none of these options were particularly popular with respondents.

Thompson said the number thinking of buying a first property with family or friends in future is relatively low.

When it came to buying smaller for a first property, just 9% of those surveyed wanted to buy an apartment – although that figure increased to 22% for those in the 18 to 19 year old range.

Thomson said that, while Auckland’s apartment market is growing with considerable pace, there are just as many luxury downsizers and investors buying as there are first home buyers.

“So while these small numbers may point towards a growing desire for high-density living among younger people, many first-timers (70%) are still after a stand-alone home.”

Meanwhile, becoming a landlord was a more likely option for those looking to buy in the next couple of years (15%) than it was for those looking to purchase in three or more years (6%).

NZ Property Investors Federation executive officer Andrew King was surprised by the low number of respondents wanting to buy an apartment.

He said that, given the current housing environment in Auckland, along with the increasing trend to settle down later, he would have thought buying an apartment would be a much more popular option.

“If it’s all about getting on the property ladder, buying smaller is a great option which suits many.

“Even if you have a family, you can invest in a smaller property – like an apartment – and rent a family home. That gives you a start.”

Alternatively, buying a larger, but more affordable, property out of Auckland and renting it out while renting in Auckland is an option, King said.

“It’s a tried and tested strategy for those wanting to buy a property, especially for those put off by Auckland’s expensive prices and low yields.

“It probably works best for people who are originally from somewhere other than Auckland and, ultimately, want to move back there.”

However, the difficulty of saving for a suitable deposit in the current market also impacts on first property buyer choices.

Go2Guys mortgage broker Campbell Hastie said many first time buyers rely on Kiwisaver funds as part of their deposit and those funds have to be used for a property which will be owner-occupied.

“We do have a fair amount of people coming in and wanting to buy a more affordable rental property.

“But, once we do the sums, they tend to end up opting to use the combination of savings and Kiwisaver funds – and get a family house.”

In his view, interest in apartments as a first property purchase is definitely increasing, although it remains a “drop in the bucket” compared to the demand for standalone houses.

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AIA 5.35 4.49 5.25 5.55
ANZ 5.54 5.15 5.85 6.15
ANZ Blueprint to Build 2.78 - - -
ANZ Special - 4.55 5.25 5.55
ASB Bank 5.35 4.49 5.25 5.55
Avanti Finance 5.45 - - -
Basecorp Finance 6.45 - - -
Bluestone 5.29 7.49 7.59 -
BNZ - Classic - 4.55 5.25 5.45
BNZ - Mortgage One 5.55 - - -
BNZ - Rapid Repay 5.55 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.55 5.35 5.94 5.99
BNZ - TotalMoney 5.55 - - -
CFML Loans ▲6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.70 5.20 -
Heartland Bank - Online 4.00 3.85 4.70 4.84
Heretaunga Building Society 5.95 4.80 5.50 -
HSBC Premier 5.49 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.25 ▲4.29 ▲5.09 ▲5.35
Kainga Ora ▲5.43 ▲4.57 ▲5.58 ▲5.85
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 5.00 5.55 6.19 6.39
Kiwibank - Offset 5.00 - - -
Kiwibank Special 5.00 4.55 5.19 5.39
Liberty 4.84 - - -
Nelson Building Society 5.95 4.95 5.85 -
Pepper Essential 3.44 - - -
Resimac 4.59 5.60 6.16 6.29
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SBS Bank 5.29 4.69 5.35 5.49
SBS Bank Special - 4.19 4.85 4.99
Select Home Loans 4.09 4.29 4.86 5.09
The Co-operative Bank - First Home Special - ▲4.19 - -
The Co-operative Bank - Owner Occ 5.45 ▲4.29 5.19 5.45
The Co-operative Bank - Standard 5.45 ▲4.79 5.69 5.95
TSB Bank 5.59 ▼5.14 6.05 6.15
TSB Special 4.79 ▼4.34 5.25 5.35
Unity 5.65 ▲4.80 ▲5.50 -
Wairarapa Building Society 5.24 4.55 5.20 -
Westpac 5.54 5.09 5.79 6.09
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.54 - - -
Westpac Special - 4.49 5.19 5.49
Median 5.45 4.55 5.25 5.52

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